We recently covered the decision from the Northern Ireland Court of Appeal in the case of Patterson v Castlereagh Borough Council which held that voluntary overtime can, in principle, be included for the purposes of calculating holiday pay. Whilst that decision is not binding and only persuasive in England, Wales and Scotland, it appears that the Midlands West Employment Tribunal was persuaded in reaching its decision in the case of White & Others v Dudley Metropolitan Borough Council.

Background

Dudley MBC employed a number of tradesmen to work on the Council’s portfolio of social housing. The tradesmen were invited to work on a Saturday on a purely voluntary basis, and voluntarily went on standby to handle repairs and emergencies, every four weeks. The tradesmen brought a claim for unpaid holiday pay and argued that the voluntary work and stand-by had been so regularly performed that they formed part of their “normal” work and this should be reflected accordingly in their holiday pay. The Council argued that the tradesmen were under no contractual obligation to undertake this extra work and as the work was voluntary, it did not form part of their contractual pay.

The compulsory/voluntary overtime distinction

Since the Bear Scotland decision, a distinction has been made between compulsory overtime (which does count towards holiday pay) and voluntary overtime, with voluntary overtime being defined as “work which the employer asks an employee to do but which the employee is free of any contractual obligation to perform unless he agrees at the time to do so”.

Voluntary overtime did not arise on the facts of Bear Scotland, so was left undecided, although we now have the persuasive judgment in Patterson. Following Bear Scotland, employers had sought to rely on the distinction to justify the difference in holiday pay calculations for compulsory and voluntary overtime.

The decision

Employment Judge Warren ruled that the Claimants’ voluntary overtime, voluntary standby and voluntary call-out payments should be considered “normal pay” when undertaken with “sufficient regularity”, which means they should be reflected when calculating a worker’s holiday pay. In this instance, because the Claimants had worked overtime on a Saturday for a number of years and performed call-out duties for a number of years, payment for this voluntary work became part of their normal, expected pay.

What does this mean for employers?

This means that workers who work voluntary overtime regularly could be eligible for holiday pay for that voluntary overtime, if it has been sufficiently regular over a significant duration. There is still uncertainty over what will be considered “sufficiently regular”, with the Claimants’ barrister suggesting that this may be as broad as including overtime undertaken once a quarter.

As this is a first instance decision, it is not binding, but it is indicative of the approach that the Tribunal is taking, especially in light of the previous decision in Patterson, and therefore employers should prepare accordingly. Employees who regularly work extra hours and are remunerated for those hours may now consider bringing a claim for unpaid holiday pay. Employers will want to consider how much and how regularly they rely on voluntary overtime in the running of their business, quantify potential liability and watch any potential appeal from Dudley MBC with great interest.