Voluntary overtime must be included in holiday pay

17 August


The Employment Appeals Tribunal (EAT) has ruled that where employees voluntarily work overtime, the extra hours that they work must be included in the calculation of holiday pay.


In a recent case, Dudley Metropolitan Borough Council v Willetts, the Claimants were tradesmen who worked for a local authority. As well as their day-to-day duties, they also voluntarily worked overtime for the purpose of carrying out on-call work, which led to higher pay.


Because they carried out this overtime on a regular basis, the Claimants argued that they were entitled to have the extra pay included in the calculation of their holiday pay. The employer argued that holiday pay is only payable in respect of normal pay, and the Claimants should not be entitled to extra in respect of overtime which they did not have to work.


The EAT held that since the employees worked the overtime on a regular basis, it was effectively part of their normal working hours and normal pay. They were therefore entitled to be paid the same when they took annual leave.


Holiday pay can be a difficult area for employers to navigate. The EAT confirmed that the basic principle, set down by the European Court of Justice in previous cases, is that holiday pay must be equivalent to “normal pay”, which is the average paid to a worker over a period of time.


If you would like more information on this or a related topic, please contact the Employment and HR team.


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