Keep­ing track of vol­un­tary over­time is key to get­ting hol­i­day pay cor­rect

Belfast Telegraph - Business Telegraph - - Analysis & Company Report - By maxine orr, Part­ner spe­cial­is­ing in Em­ploy­ment law Maxine Orr is a Part­ner spe­cial­is­ing in em­ploy­ment law in Wor­thing­tons Com­mer­cial Solic­i­tors. She can be con­tacted on maxine@wor­thing­ton­ or 028 9043 4015

In re­cent years there have been a num­ber of high-pro­file cases be­fore em­ploy­ment tri­bunals both in North­ern Ire­land and Great Bri­tain con­cern­ing how em­ploy­ers should cal­cu­late statu­tory hol­i­day pay for work­ers, and in par­tic­u­lar to what ex­tent vari­able pay­ments such as com­mis­sion and over­time should be con­sid­ered.

In the re­cent case of Dud­ley Metropolitan Bor­ough Coun­cil v Wil­letts and oth­ers UKEAT/033416/JOJ, the Em­ploy­ment Ap­peal Tri­bunal in Eng­land and Wales held that vol­un­tary over­time that is nor­mally worked should be in­cluded when cal­cu­lat­ing an em­ployee’s hol­i­day pay.

The rules for cal­cu­lat­ing statu­tory hol­i­day pay are set out in the Work­ing Time Reg­u­la­tions (North­ern Ire­land) 1998, as amended, which im­ple­ments the Euro­pean Work­ing Time Di­rec­tive ( WTD). The Work­ing Time Di­rec­tive re­quires that work­ers re­ceive ‘nor­mal re­mu­ner­a­tion’ when tak­ing hol­i­day en­ti­tle­ment and is in­tended to en­sure that work­ers are not dis­suaded from tak­ing an­nual leave by re­ceiv­ing less than their nor­mal pay dur­ing this time.

This re­quire­ment can cause prob­lems where work­ers, in ad­di­tion to their nor­mal salary, re­ceive vari­able pay­ments, as a worker’s monthly pay is likely to vary and it is there­fore not al­ways clear what con­sti­tutes ‘nor­mal re­mu­ner­a­tion’ for the pur­poses of cal­cu­lat­ing hol­i­day pay.

In the case of Dud­ley MBC, Mr Wil­lets, along with four other lead claimants, brought claims for un­law­ful de­duc­tion of wages against Dud­ley Metropolitan Coun­cil (the Re­spon­dent). The em­ploy­ees in­volved worked as elec­tri­cians, store­men, roofers, plumbers and op­er­a­tions of­fi­cers. The ma­jor­ity of the em­ploy­ees were con­tracted to work 37 hours per week, in ad­di­tion to hav­ing the right to work over­time.

In ad­di­tion to their right to work over­time, the em­ploy­ees also per­formed vol­un­tary over­time and oc­ca­sion­ally at­tended call­outs on be­half of the re­spon­dent. How­ever, the coun­cil did not in­clude pay­ments for such when de­ter­min­ing what is classed as ‘nor­mal re­mu­ner­a­tion’ for the pur­poses of cal­cu­lat­ing hol­i­day pay. The claimants ar­gued that as a re­sult of this, their hol­i­day pay had been un­law­fully un­der­paid by the coun­cil.

The em­ploy­ment tri­bunal found in favour of the em­ploy­ees and held that the pay­ments for over­time were in­trin­si­cally linked to the per­for­mance of the em­ploy­ees’ du­ties and that they per­formed the du­ties with suf­fi­cient reg­u­lar­ity for the pay­ments to be con­sid­ered ‘nor­mal re­mu­ner­a­tion’. The coun­cil ap­pealed the de­ci­sion to the EAT.

The EAT dis­missed the coun­cil’s ap­peal and con­firmed that pay­ments for vol­un­tary over­time, call-outs or standby shifts must be in­cluded by em­ploy­ers when cal­cu­lat­ing ‘nor­mal re­mu­ner­a­tion’, where the pay­ments are re­ceived with suf­fi­cient reg­u­lar­ity.

Whilst the EAT con­firmed that whether a pay­ment is re­ceived reg­u­larly enough to be con­sid­ered ‘nor­mal’ is a ques­tion of fact and de­gree, rather un­help­fully it did not set out rules for de­cid­ing this.

The de­ci­sion in Dud­ley MBC also touched rather sig­nif­i­cantly upon the is­sue of zero hours con­tracts.

The pres­i­dent of the EAT, Sim­ler J held that the ex­clu­sion of pay­ments for vol­un­tary work which is nor­mally un­der­taken would amount to an ex­ces­sively nar­row in­ter­pre­ta­tion of nor­mal re­mu­ner­a­tion which would cre­ate the risk of em­ploy­ers set­ting ar­ti­fi­cially low lev­els of ba­sic con­trac­tual hours and cat­e­goris­ing the re­main­ing work­ing time as ‘vol­un­tary over­time’.

Sim­ler J recog­nised that had the re­spon­dents suc­ceeded, the log­i­cal con­se­quence would be that work­ers on low or zero-hour con­tracts would have no “nor­mal re­mu­ner­a­tion” and there­fore no en­ti­tle­ment to paid an­nual leave. Em­ploy­ers should seek to re­view the reg­u­lar­ity with which a worker re­ceives th­ese pay­ments to de­ter­mine whether there is an iden­ti­fi­able pat­tern. In ad­di­tion to this, em­ploy­ers should con­sider the to­tal value of ad­di­tional pay­ments for vol­un­tary and non-vol­un­tary over­time over the course of the hol­i­day year.

Em­ploy­ers are ad­vised to seek pro­fes­sional le­gal ad­vice where there is a reg­u­lar and dis­cernible pat­tern of pay­ments or where the to­tal value of the pay­ments is suf­fi­cient to ma­te­ri­ally im­pact the worker’s hol­i­day pay over the course of the year.

Car­ry­ing out over­time or call-out work can add to your hol­i­day pay rate

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