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HR Newsletter #83 May 2016 (Voluntary Overtime Payments)

Employment Update: Voluntary Overtime Payments

Regular voluntary overtime should be considered ‘normal’ when calculating holiday pay, judge rules A first instance case is about to add ‘fuel to the fire’, says employment lawyer   Employees who regularly work voluntary overtime beyond their contracted hours could be eligible for holiday pay on that overtime, following the initial ruling in a case that looks likely to add another level of confusion to the on-going holiday pay debate. In White & Others v Dudley Metropolitan Borough Council [2016] 1300537/2015, the presiding judge ruled that voluntary payments for overtime, standby and call-outs should be considered “normal pay” when undertaken with “sufficient regularity”, which means they should be reflected when calculating a worker’s holiday pay. It is thought to be one of the first cases in England where voluntary overtime has been found to be included in holiday pay calculations, and yet questions still lie unanswered around what can be deemed ‘sufficiently regular’. Jonathan Gidney, barrister at St Philips Chambers, who represented the claimants at trial, said: “I would say once a quarter, or more, would be classified as ‘regular’ work. Once every six months might be pushing it a bit.” The council argued that this voluntary overtime did not form part of ‘contractual pay’.  But the judge ruled that the payment for that work had to be included in the calculation of holiday pay for the first 20 days of annual leave under Working Time Regulations (Regulation No 13). “Everything that was understood previously – as far as holiday pay was concerned – was that contractual 'guaranteed' overtime (a fixed amount of compulsory overtime) and so-called 'non-guaranteed' overtime (where no overtime was fixed but the employee had to do it if asked) had to be considered in holiday pay calculations” said Gidney. “But in the tribunal, the judge accepted the argument that, if the claimants had done overtime on a Saturday for a number of years, and had performed call-out duties voluntarily for a number of years, then payment for it would become part of their normal, expected pay.” This might pave the way for claimants who regularly work an extra couple of hours a week, and get paid for those hours, to see this time reflected in their holiday pay, Gidney said. O’Neill added: “What we have done so far is establish the principle.  We now have to look at each claimant’s individual case to determine whether there is a benefit to them to take the claim forward.  I don’t know if Dudley are going to appeal it, but in some ways I hope they do because the precedent is being set now for this type of voluntary work to be done.” What does this mean? It clarifies that voluntary overtime (overtime where an offer of overtime is made but there is no compulsion on the staff to accept it) can / may be used in the calculation the value of a subsequent day’s holiday if the level of overtime is such that it has become a REGULAR feature of their pay. (taken from the CIPD e-bulletin)