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The Employment Tribunal’s view on voluntary holiday pay

Napthens - October 25th 2016

In the recent case of Brettle v Dudley Metropolitan Borough Council ET/1300537/15, it has been questioned whether voluntary overtime, and other payments associated with rotas worked voluntarily, should be included in the calculation of statutory holiday pay.

During its deliberation, the Tribunal considered obiter comments from the renowned case of Bear Scotland, namely the question surrounding what constitutes “normal remuneration” under the Working Time Directive.

In accordance with the Working Time Directive Employers will be aware that workers have the right to at least 4 week’s paid annual leave. Following recent case law into what defines “normal remuneration” it was determined that a worker on holiday is entitled to their basic salary and remuneration which is “intrinsically linked to the performance of tasks which they are required to do under the contract of employment and in respect of which a monetary amount, included in the calculation of his total remuneration, is provided.”

The case concerned a claim for an unlawful deduction of wages by five lead Claimants on behalf of 56 employees, who carried out housing repairs on behalf of Dudley Metropolitan Borough Council. The crux of the claim circumvented around the argument, that whilst they had received a holiday payment, the correct rate had not been used. It was argued that they should have received monies calculated against voluntary overtime, voluntary standby allowances, voluntary call-out payments and mileage payments.

It was noted that of the five lead Claimants, they all worked different shift patterns, which varied from voluntary overtime one in every four weeks, another was one in every five and another rarely worked voluntary overtime.

The Tribunal subsequently concluded that the out-of hours standby, call-out allowances and overtime were in relation to voluntary work. However, it concluded that a failure to include these monies within the holiday pay calculation could effectively deter a worker from taking annual leave (as they could potentially be worse off financially).

Moreover, whilst the rotas were provisionally considered as voluntary for the employees, it was accepted that once an employee’s name was listed on the rota, they were required to attend the workplace/ be available on standby. Therefore, the Tribunal concluded that these payments were intrinsically linked to the work required to be done under the contract.

With regards to voluntary overtime, it was concluded that where this is regularly worked, it was determined that this should be added to the overall holiday pay calculation and the same principles applied to the voluntary overtime provisions. It was however noted, there where the overtime is sporadic then this should not normally be included in the calculation.

Overall, it was confirmed that these additional payments need only be taken into account for the calculation of holiday pay for Regulations 13. The Tribunal identified that Regulation 13A leave and any other contractual leave could should be calculated in line with section 221 of the ERA 1996.

It should however be noted that this is non-binding Tribunal decision and therefore is only persuasive case law at this stage. It is however still worth Employers having this decision on their radar, particularly the principles that once a person has volunteered for a rota, they are viewed as committed to this.