In our January 2015 update we outlined the state of play in relation to holiday pay as it stood after the recent run of cases on that point. As we mentioned in that update, the position on voluntary overtime had not been expressly dealt with by the Bear Scotland appeals and on the face of it, calculating the payments due for holiday did not appear to require a consideration of any monies earned by an employee who did regular overtime on a voluntary basis.

As we stated however, further case law on that point was awaited.

A recent decision of the Northern Ireland Court of Appeal in Patterson v Castlereagh Borough Council has addressed the question of voluntary overtime and whether or not those payments should be taken into account when calculating holiday pay. The Northern Ireland Court of Appeal has confirmed that there is no reason, in principle, why voluntary overtime should not be included in holiday pay calculations.

The Claimant was employed by Castlereagh Borough Council at the Dundonald International Ice Bowl. The Claimant’s holiday pay had been calculated by reference to his basic hours for his full-time role, without taking into account the overtime that he worked as an assistant plant engineer.

The Northern Ireland Industrial Tribunal rejected the Claimant’s claim, finding that voluntary overtime could not, as a matter of principle, be included when calculating how much to pay him for his statutory holiday pay. The Claimant appealed to the Northern Ireland Court of Appeal and it held that voluntary overtime, being overtime which the employer is not obliged to provide and which the employee is not obliged to perform, should in principle be included in calculating employees’ holiday pay if it is normally carried out, and if it can be described as forming part of “normal remuneration” by being an apparently permanent feature. The case was therefore remitted back to the Tribunal to consider the evidence in respect of the overtime worked by the Claimant.

Whilst the decision of the Northern Ireland Court is not binding on the English Courts, decisions of this nature can be persuasive, particularly where there are no existing binding cases on the issue. It is expected that this will only be the start of the case law emerging on this issue. However, until such time as there is further case law, some uncertainty may remain about how to treat voluntary overtime for the purposes of holiday pay calculations, particularly since the Court did not analyse the circumstances in which voluntary overtime payments would be considered to be forming part of “normal remuneration”. Clearly each case will turn on its own facts, and the position will be very much dependent upon the particular working pattern of the employee in question and whether or not overtime is normally carried out.

If any issues arise in respect of the above or if you have any concerns, please contact Linky Trott or any member of the Edwin Coe Employment Team.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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