Should voluntary overtime be taken into account when calculating holiday pay?
The Employment Appeal Tribunal has this week issued its decision in a case which considered whether voluntary overtime should be treated as forming part of a worker’s normal remuneration for the purpose of calculating holiday pay. In this case, the employees volunteered to perform additional duties which their contracts of employment did not require them to carry out.
The Employment Appeal Tribunal has held that the exclusion of payments for ‘voluntary’ work which is normally undertaken is inconsistent with the principle now clearly established in EU law that 'normal remuneration' must be paid during annual leave.
In essence, the impact of the decision is that a worker should not be worse off financially for taking holidays, as to do so might deter the worker from taking annual leave.
The EAT considered what payments would count as ‘normal’ for the purpose of holiday pay, and held that for a payment to count as ‘normal’, it must have been paid over a sufficient period of time. However, what is ‘normal’ pay in any particular situation will also be a question of fact and degree, on a case by case basis, taking into account the circumstances of each case.
A copy of the decision can be obtained here:
If you would like to discuss the implications of this decision for your business further, or you require support on any employment law matter, please do not hesitate to contact us on 0141 331 5150.