Counting Voluntary Overtime When Calculating Holiday Pay

Counting Voluntary Overtime When Calculating Holiday Pay

The law continues to move apace in the area of what counts as “normal pay” when calculating holiday pay.

Last year, the courts decided that if overtime was compulsory, it should be included in the amount of a week’s pay for the purpose of holiday pay calculation. Now, the courts have progressed this by ruling that voluntary overtime needs to be included in the calculation, particularly when it is worked regularly.

In this case, various tradespeople worked regular overtime which was not compelled by the contract. They did it because they were paid overtime. The work they did during the overtime was the same as they did during normal hours.  The Appeal Tribunal have ruled that workers must not be financially deterred from taking holiday. Therefore if they normally get it when working, they should get it when they are on holiday.

For those employers wishing to stay within the law on this point, the best way to avoid a claim will be to pay holiday pay for hourly paid workers who regularly do overtime, by averaging the pay for the 12 weeks prior to the holiday, and using that as a “weeks wages” for the purpose of holiday pay.

The case in question is Dudley Metropolitan Borough Council v Willets. It can be read first hand at the following link: http://www.bailii.org/uk/cases/UKEAT/2017/0334_16_3107.html

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