It is well established that workers are entitled to their "normal remuneration" during the four weeks of annual leave granted under the Working Time Directive. However, what constitutes "normal remuneration" continues to be a contested area despite the recent developments in case law on the subject.
The EAT has already addressed the issue of contractual commission payments and non-guaranteed overtime payments, holding that these payments should be included where they are intrinsically linked to the performance of the tasks carried out under the contract of employment.
However, in the most recent claim, an employment tribunal was asked to consider whether the calculations of holiday pay for the 56 claimants employed by Dudley Council should include voluntary overtime, voluntary standby allowances and voluntary call-out payments. It was held that, although the rotas in question are voluntary, once an employee has signed up to the relevant rota, they are required to attend the workplace (or be available, if on standby). Therefore the payments are inherently connected to the work required to be done under the contracts. Furthermore, according to the Tribunal, as a number of the voluntary payments have previously been made with sufficient consistency and regularity, they could be properly identified as forming part of "normal remuneration" and should be included when calculating the workers' statutory holiday pay.
Whilst this most recent tribunal decision is non-binding, and each case will turn on its own facts, it demonstrates the direction that the case law in this area is taking. It applies the calculation of statutory holiday pay in line with the EAT's previous decisions; that these calculations should include the payments a worker normally receives under their contract of employment, having particular regard to the frequency and regularity with which the payment is made.
Employers might consider whether to wait for an appellate decision on this point or take action now. In any event, it would be advisable for employers to review the payments that they make to staff and assess their frequency and connection to the work being performed in order to identify any potential risks going forwards.
