Regular voluntary overtime included in holiday pay

The case of Dudley Metropolitan Borough Council v Willetts and others has revisited the area of holiday pay, but it is the first time that the Employment Appeal Tribunal (EAT) has issued a ruling on voluntary overtime payments in the context of holiday pay.

At the crux of the case, the question was whether payments received in respect of voluntary overtime should be treated as part of a worker’s normal remuneration.

Endorsing the decision of the Employment Tribunal, the EAT held:

  • There is no doubt that payments in respect of overtime (whether that be compulsory, non-guaranteed or voluntary) constitute remuneration as a matter of domestic and EU law.
  • For a payment to count as ‘normal’ it must have been paid over a sufficient period of time. Payments which are not usually paid or are exceptional would not count, but payments that are usually paid and are regular across time may do so.
  • For example, payments made one week each month or one week in every five weeks, even if it is not paid more frequently or even each week, may amount to a sufficient period of time to count as ‘normal’.

To discuss this case further, speak to your Employment Law Adviser who can help you with all your holiday pay challenges.

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