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Holiday Pay to Include Voluntary Overtime

Posted On: 18/08/2017

In the recent case of Dudley Metropolitan Borough Council v Willetts and others EAT/0334/16 the Employment Appeal Tribunal (EAT) held that voluntary overtime should be included in ‘normal’ remuneration for holiday pay calculations.  Previously it was only regular, but not voluntary overtime, that was to be included in holiday pay calculations.   

The workers in this case are employed as electricians, plumbers, roofers and operations officers.   They have set contractual hours and work entirely voluntary additional overtime and on-call work.   

Dudley Council stated that overtime pay was not ‘normal’ remuneration as it lacked an intrinsic link to the performance of tasks required under the contract of employment.  However, the EAT rejected this view on the basis that when staff were working overtime they were performing the same tasks as they do during their normal working hours. They added that to discount these payments from holiday pay calculations results in a financial disadvantage which may deter workers from taking annual leave. 

This ruling now means all types of overtime, including voluntary, must be included when calculating a worker's statutory holiday pay entitlement, with the exception of overtime that is only worked on a genuinely occasional and infrequent basis. 

The EAT also decided that regular out-of-hours standby payments and call-out allowances should be included in holiday pay. 

In summary, workers should usually receive the same pay while they are on annual leave as they normally receive while they are at work. Therefore, we advise that your holiday pay calculations are amended to include:  

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