Voluntary overtime can, in principle, be included for the purposes of calculating holiday pay in Northern Ireland. That was the conclusion of the Northern Ireland Court of Appeal who delivered judgement in the Patterson v Castlereagh Borough Council(“Patterson”) case this morning (26 June).

What is the case about?

Mr Patterson is employed by Castlereagh Borough Council on two concurrent contracts, one as a relief/casual worker and the other a full time contract of employment as an Assistant Plant Engineer. He alleged unauthorised deduction from wages in relation to holiday pay, in respect of both his relief/casual work and overtime work conducted under the full time contract of employment. Part of the employer’s defence was that this overtime was not compulsory, but overtime that Mr Patterson had volunteered to perform. Mr Patterson is the lead claimant in a multiple claim pursued against the Council.

At first instance, the Northern Ireland Industrial Tribunal ruled that the Working Time Directive does not require voluntary overtime to be taken into account when calculating holiday pay, relying on the Bear Scotland decision. This ruling has been appealed on the basis that the Tribunal misdirected itself in applying Bear Scotland because that case made no findings on the issue of voluntary overtime.

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. The issue of voluntary overtime did not arise in the facts of the Bear Scotland case and so the issue was left undecided. Many employers have since sought to rely on this apparent distinction, to justify a different approach to calculating holiday pay in respect of compulsory and voluntary overtime.

The decision

The Northern Ireland Court of Appeal concluded that the Industrial Tribunal was in error in relying on its interpretation of Bear Scotland. In principle there is no reason why voluntary overtime cannot constitute part of “normal” working hours. The question of what constitutes “normal” working hours is a matter of fact for the Tribunal in each case and should be assessed over a reference period. The correct reference period was not identified by the Northern Ireland Court of Appeal. Mr Patterson’s case was remitted to the Tribunal for evidence and assessment of what is a “normal” working week in this case.

Impact of the decision

Northern Ireland Court of Appeal decisions are not binding on Courts and Tribunals in England, Wales and Scotland. However, decisions can be cited as ‘persuasive’ in our Courts. Employees and unions have been keeping a close eye on this case and will no doubt see this as a green light for similarly successful cases over here.

It is worth noting that voluntary overtime will have to be undertaken with sufficient regularity to constitute part of a worker’s normal working hours and there will hopefully be some practical guidance on this once the Patterson case is remitted to the Tribunal.

As a result of the Patterson appeal, employers may want to consider how often they rely on “voluntary” overtime in the running of their business, quantify potential liability and wait for the next test case in our own jurisdiction…

A reminder:

The 1 July 2015 is a red letter day in the employment law calendar as it marks the introduction of the two year cap on backpay in holiday claims. As the deadline draws closer, the Employment Tribunal Service predicts a short term spike in the number of claims lodged in the next few days as employees rush to submit their claims before the changes take effect. This stampede may be even greater in light of the Patterson decision, although so far holiday pay has not proved to be the “next equal pay” deluge that some predicted.