Holiday pay: “nothing in principle” to prevent inclusion of voluntary overtime

overtime-holiday-pay

In a Northern Ireland Court of Appeal hearing today, the employer’s legal representatives have conceded that there is “nothing in principle” to prevent purely voluntary overtime from counting towards holiday pay.

Holiday pay and voluntary overtime: judgment published

The judgment in this case was published on 26 June 2015. XpertHR has a full case report on Patterson v Castlereagh Borough Council, including guidance on the implications for employers.

The appeal in Patterson v Castlereagh Borough Council was heard at the Royal Courts of Justice in Belfast on 17 June 2015. Although the case is not binding on tribunals and courts in England, Wales and Scotland, it is of interest to all UK employers.

This is because recent case law on the calculation of holiday pay did not consider whether or not the inclusion of pay for overtime in paid annual leave extends to purely voluntary overtime where the work may be offered, but the worker can choose whether or not to work it.

In Bear Scotland Ltd and others v Fulton and others; Hertel (UK) Ltd v Woods and others; Amec Group Ltd v Law and others, the Employment Appeal Tribunal (EAT) held that regular non-guaranteed overtime should be included in holiday pay calculations.

In Bear Scotland, the overtime work was related to tasks that the workers were required to carry out under their contracts of employment, but there was no obligation on the employers to offer overtime.

One of the big questions that was left after the EAT’s decision was whether or not the principles set out in that case apply to circumstances in which workers are not required to work overtime.

In a first-instance decision given after the EAT judgment in Bear Scotland, a Northern Ireland tribunal rejected the unlawful deductions from wages claim brought by Mr Patterson, an engineer who worked for Castlereagh Borough Council.

Although his contract of employment was silent on overtime, it was clear that the employer was not obliged to offer overtime, nor was he required to undertake overtime when it was offered.

In the appeal hearing against the tribunal judgment, the Northern Ireland Court of Appeal judges expressed surprise at the tribunal’s assumption that purely voluntary overtime does not need to be included in holiday pay.

The judges were also at a loss to explain why the tribunal had come to this decision, without considering detailed evidence of Mr Patterson’s precise overtime arrangements.

The employer’s legal representatives accepted that there is “nothing in principle” to prevent purely voluntary overtime from counting towards holiday pay in appropriate circumstances.

However, the employer’s side maintained that each case needs to be decided on its facts, depending on factors such as the regularity and permanence of the overtime arrangement.

Both parties stressed that the treatment of voluntary overtime in holiday pay calculations is of a much wider public significance.

The Court of Appeal judges indicated that, in light of the employer’s concession, the appeal would be allowed and a full judgment would be issued as soon as possible.

The case will then go back the tribunal to be reheard.

Continue reading for further analysis of the hearing and the possible implications for employers on XpertHR…

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