In Brettle v Dudley Metropolitan Borough Council, the Employment Tribunal decided that voluntary overtime pay might need to be included when calculating basic annual leave pay (being pay in respect of the first four weeks of leave), depending on the circumstances. Whether it should be included or not depends on whether the voluntary overtime pay is deemed to be ‘normal pay’. The regularity and frequency of the voluntary overtime are the key factors.

By way of example, one individual worked regular Saturdays and was paid overtime for that which was considered normal pay. Another only received overtime in major emergencies and on other odd occasions; as a result that pay was not considered normal pay. Although technically non-binding, the decision is in keeping with binding decisions in the area, which look to the factual circumstances, rather than employing a one-size fits all approach.

What Should Employers Do Next?

The law regarding holiday pay calculation is continually evolving. What we know presently is that the first four weeks of holiday pay should include any commission, bonuses and overtime directly and intrinsically linked to the work that the worker is required to do. The above case, whilst only a nonbinding Employment Tribunal decision, suggests that the holiday pay position is not yet settled. Employers should also now have regard to the regularity and frequency employees have worked voluntary overtime when calculating statutory holiday pay.