Regular voluntary overtime should be considered ‘normal’ when calculating holiday pay, judge rules

A first instance case is about to add ‘fuel to the fire’, says employment lawyer

Employees who regularly work voluntary overtime beyond their contracted hours could be eligible for holiday pay on that overtime, following the initial ruling in a case that looks likely to add another level of confusion to the ongoing holiday pay debate.

In White & Others v Dudley Metropolitan Borough Council [2016] 1300537/2015, the presiding judge ruled that voluntary overtime, voluntary standby and voluntary call-out payments should be considered “normal pay” when undertaken with “sufficient regularity”, which means they should be reflected when calculating a worker’s holiday pay.

Laurence O’Neill, employment solicitor at OH Parsons, who brought the case on behalf of 56 tradesmen who were members of trade Union UCATT, said the development could prove highly significant.

It is thought to be one of the first cases in England where voluntary overtime has been found to be included in holiday pay calculations, and yet questions still lie unanswered around what can be deemed ‘sufficiently regular’.

Jonathan Gidney, barrister at St Philips Chambers, who represented the claimants at trial, said: “I would say once a quarter, or more, would be classified as ‘regular’ work. Once every six months might be pushing it a bit.”

The tradesmen – including plumbers, electricians and carpenters – were invited to work on a Saturday on a purely voluntary basis while working on the council’s stock of social housing. They also elected to go on standby every four weeks, to deal with emergency call-outs and repairs – again, not at the employer’s discretion.

“A lot of these guys were getting another £725 every month for the week they were on standby, and effectively relied on the overtime payments to make up their pay packets,” Gidney said.

This employee on-call rota and voluntary process had been in place for such a period, and with such regularity, that it had become part of their ‘normal work’ and accordingly part of their ‘normal pay’. The council argued that it did not form part of ‘contractual pay’. But the judge ruled that the payment for that work had to be included in the calculation of holiday pay for the first 20 days of annual leave, under regulation 13 of the Working Time Regulations.

“Everything that was understood previously – as far as holiday pay was concerned – was that contractual ‘guaranteed’ overtime (a fixed amount of compulsory overtime) and so-called ‘non guaranteed’ overtime (where no overtime was fixed but the employee had to do it if asked) had to be considered in holiday pay calculations,” said Gidney.

The claimants argued that, although the recent Northern Ireland Court of Appeal case Patterson v Castlereagh Borough Council [2015] IRLR 721 held that payments of a voluntary nature were not necessarily excluded from the calculation of holiday pay, “it was not at all clear whether all elements of non-contractual voluntary pay, and, in particular, voluntary overtime should be included”, Gidney added.

“But in the [West Midlands] tribunal, the judge accepted the argument that, if the claimants had done overtime on a Saturday for a number of years, and had performed call-out duties voluntarily for a number of years, then payment for it would become part of their normal, expected pay.”

This might pave the way for claimants who regularly work an extra couple of hours a week, and get paid for those hours, to see this time reflected in their holiday pay, Gidney said.

O’Neill added: “What we have done so far is establish the principle. We now have to look at each claimant’s individual case to determine whether there is a benefit to them to take the claim forward.

“I don’t know if Dudley are going to appeal it, but in some ways I hope they do because the precedent is being set now for this type of voluntary work to be done.”

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