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UK HR e-briefing - Holiday pay and voluntary overtime: latest ruling

  • United Kingdom
  • Employment law - HR E-Brief


News reports suggest that the Northern Ireland Court of Appeal (NICA) has ruled that voluntary overtime (ie overtime that the employee can choose not to work) may, in some cases, have to be taken into account when calculating holiday pay under the Working Time Directive.

The NICA’s decision was reached in the case of Patterson v Castlereagh Borough Council, which was heard yesterday. The appeal was against a decision of a Northern Ireland Industrial Tribunal (IT), which ruled that the Working Time Directive (WTD) does not require voluntary overtime to be taken into account when calculating holiday pay. In reaching that conclusion the IT had regard to the Employment Appeal Tribunal’s decision in Fulton v Bear Scotland Ltd (although the EAT’s decision is not binding on Industrial Tribunals in Northern Ireland). In the Fulton case the EAT ruled that when calculating holiday pay the employer should have taken into account the non-guaranteed overtime that the claimant worked (ie overtime which the employer was not obliged to offer but which the claimant was required to do if asked). Although the IT agreed with the EAT’s interpretation of the law, it was of the opinion that the EAT’s reasoning only applies to overtime that the worker is obliged to do if asked and not the kind of voluntary overtime in issue in Mr Patterson’s case.

At yesterday’s hearing it appears that the employer’s representative may have conceded that there is no difference in principle between non-guaranteed overtime and voluntary overtime and the question of whether it must be included in holiday pay turns only on the ‘regularity and permanence’ of the overtime arrangements. On the basis of that concession it seems the appeal was allowed and the IT decision overturned. The case will now be returned to the IT to consider whether the claimant’s overtime pay did in fact constitute part of his normal pay, taking into account matters such as how frequently he had worked overtime.

What is not clear is whether the NICA considered whether the requirements of the WTD can be read across (‘purposively’) into NI domestic legislation (which is in substantially the same terms as the legislation applying in Great Britain). It is possible that the employer’s representatives chose not to argue this point in the NICA yesterday, either on the basis that the reasoning on the point in the Fulton case is compelling and applies to voluntary overtime as much as non-guaranteed overtime, or because the issue is somewhat academic in the case of a public sector employer, as workers can rely directly on the WTD to claim their rights. If the matter was argued then the point must have been decided in the claimant’s favour, given that the case has, apparently, been returned to the IT to consider Mr Patterson’s claims anew.

The NICA will issue a written judgment in due course confirming the outcome. It will be interesting to see whether it attempts to identify the criteria that should be applied in judging whether overtime is sufficiently ‘regular’ and ‘permanent’ for it to constitute normal pay. If it does then, although the judgment will not be binding in the rest of the UK, it will certainly be influential.

Link to report in Personnel today