For some time now it has been clear that all elements of pay that are regularly made should be included in holiday pay so as not to deter individuals from taking holiday. On the periphery of the decisions to date has been the issue of genuinely voluntary overtime, and whether this should also be included. A recent employment tribunal decision has found that it should.
Whilst employment tribunal decisions are not legally binding on other tribunals, they show the direction of travel of the cases, and it seems likely that this approach will be followed. This doesn’t, however, help in assessing where the line should be drawn between regularly worked overtime, and rarely worked overtime. This will, unhelpfully, be very fact dependent.
Employers should revisit holiday practices to ensure all aspects of normal pay are included, including voluntary overtime payments if worked regularly. This approach only strictly applies to the first 20 days of holiday (under the Working Time Directive) and not the additional 8 days holiday provided for by the Working Time Regulations. In practice it may be administratively more convenient to make holiday payments in the same way for all holiday, but some employers may choose to separate out the holiday, depending on what sums are involved.