Holiday Pay and Voluntary Overtime

 

As the saga surrounding overtime and holiday pay continues, employers and employees can expect further changes to how holiday pay is calculated.

Bear Scotland Ltd v Fulton [2015] 1 C.M.L.R. 40 affects employers who require employees to work overtime. The Employment Appeal Tribunal (EAT) held that guaranteed overtime (overtime which the employee is required to work and the employer guarantees to provide as specified in the contract of employment) and non-guaranteed overtime (overtime which the employee is required to work but the employer does not guarantee to provide) should be included in holiday pay calculations. The recent Northern Irish case of Patterson v Castlereagh Borough Council [2014] NIIT 1793_13IT took the decision in Bear Scotland one step further when it saw the Northern Ireland Court of Appeal hold that voluntary overtime (overtime where employees are not required to perform and likewise employers are not required to provide) should also be included in holiday pay calculations.

Although rather unhelpfully, no guidance was provided by the Northern Ireland Court of Appeal as to the test(s) an employer must draw upon when establishing holiday pay. It was however, highlighted that this was a “question of fact” to be decided by each tribunal on a case by case basis looking at the individual circumstances of each case.

As Patterson v Castlereagh Borough Council is from Northern Ireland, it is not legally binding in the Courts of England and Wales, but it is important for employers in England and Wales to note its persuasive authority and the fact it is likely to impact future decisions in the ongoing challenges surrounding holiday pay.