6 days ago
Further developments in Holiday Pay
Following developments earlier this year that mean employers must take into account compulsory overtime when calculating holiday pay, the Court of Appeal in Northern Ireland has extended this principle to voluntary overtime.
The Court did not see fit to shed any light on how this should be calculated, or indeed whether it is only voluntary overtime that is regular or habitual, or, whether it applies to all overtime.
Most commentators are saying that this will not be the last case to develop this area of law, and we think that has to be correct. Decisions by the Court of Appeal in Northern Ireland are not binding on the Employment Tribunal in England and Wales but they are persuasive.
However, the points we feel are sensible with this current fluctuating state of law are as follows:
- If overtime is compulsory, calculate holiday to include overtime.
- If overtime is voluntary, but worked every day, or regularly, calculate holiday to include overtime.
- If overtime is occasional, then at this point, you may get away with not including it in holiday pay.
- If you have a unionised environment, you are more likely to get challenged. Individuals are unlikely to want to spend the money going to tribunal for what will be a petty sum.
If including overtime in holiday pay, you should calculate it using an average of the previous 12 weeks before the holiday period.
It is possible, but by no means certain, that unionised workplaces could face claims for underpayment of holiday pay, but for claims issued on or after tomorrow (1st July) no claim will be able to go back more than 2 years.
The full case can be read at the following link, but be warned, it does not offer much guidance for employers, or indeed any comfort: