Regular overtime and holiday pay
A case on overtime and holiday pay at the EAT (Employment Appeals Tribunal) says that regular overtime forms part of ‘normal work’ and be treated as such when calculating holiday pay for employees. This is because holiday pay is calculated as a proportion of your normal working hours.
The case saw 56 employees bring a number of holiday pay claims against Dudley Borough Council, who carried out the repair and maintenance of council houses. They all received holiday pay for approximately 37 hours a week; however they sought additional holiday pay for being on call and working additional hours on a regular basis of every 4-5 weeks. This was said to have occurred over a “period of years” which the Court deemed a “sufficient period of time”.
The tribunal sided with the Claimants’ argument that carrying out voluntary overtime involves performing tasks that are required by their work contract. As such, regular overtime must be factored into calculations for the first 4 of the 5.6 weeks holiday pay employees in the UK are entitled to. This is because the 4 weeks are from EU law and the other 1.6 weeks are from UK law.
The EAT explained how the decision to uphold the initial ruling of the ET is based on a matter of fairness. Employers must factor in regular overtime to ensure that employees are not financially disadvantaged as a result of taking leave.
The decision is not expected to expose employers to backdated claims for voluntary overtime; however it may leave them vulnerable to claims for underpayment of holiday pay in their current year. That said, the decision lacks clarity as it is not stated how regular the overtime must take place, or how long a period of having carried out the work constitutes a “sufficient period of time”.
Case report: Dudley Metropolitan Borough Council v Willett
By Matthew Wheatley
Image courtesy of Jeff Doe