Policy News Journal - 2016-17

The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal

Regular voluntary overtime to be included in holiday pay 27 April 2016

An employment tribunal ruling adds another layer of complexity to the already onerous holiday pay calculations.

The Midlands West Employment Tribunal have just ruled that in calculating the amount of holiday pay that an employer pays to its workers, it has to include payments for voluntary overtime, voluntary standby and voluntary call out payments, providing that work has been undertaken with sufficient regularity to have become part of the worker’s normal pay.

With thanks to St Philips Barristers for providing not only the details of this latest case, but a comprehensive summary of related cases and regulations:

The case ‘White & Others v Dudley Metropolitan Borough Council’, concerned 56 workers who were employed by Dudley MBC as specific and multi-skilled tradesman, who were engaged in the repair and maintenance of the Council’s housing stock. All of the employees worked a standard 37 hour contract, with some also working 2 or 4 hours additional contractual overtime. The Council calculated their holiday pay based on those core contractual hours (ie basic pay) only. In addition to those hours the employees worked additional voluntary overtime (often at weekends) and, again on a purely voluntary basis, joined a one in four or five week rota in which, when their rota week came round, they remained on standby for out of hours emergency work and if necessary call out if emergency work was required during those hours. The workers would then be paid an additional payment for all voluntary work, standby out of hours and call outs that they undertook. In addition, some were paid a mileage allowance for trips between jobs. Those payments consisted of the cost of the trip plus an additional sum which was taxed as a benefit in kind. The Council excluded all of the additional payments from their calculation of holiday pay, on the grounds that it was not contractual pay. They argued that there was no contractual obligation to do the extra work and as the work was voluntary, it could not be said to have derived from their contracts.  The first type is holiday leave under regulation 13 of the Working Time Regulations, which implements Article 7 of the Working Time Directive. It relates to the first 20 days of annual leave that a worker has in any leave year.  The second type of holiday leave is under regulation 13A of the Regulations. This covers 8 additional days, essentially the bank holidays.  The last type relates to any extra days that a worker may have under their contract. Both regulation 13A and purely contractual days are to be determined by s221-224 of the Employment Rights Act 1996 and relate to work done under the contract of employment. There are three types of holiday leave:

Purely voluntary work cannot be said to be under the contract of employment, so this case concerned the first 20 days’ leave only, under regulation 13 of the Working Time Regulations.

The starting point is that workers must be paid their normal levels of remuneration during their rest periods or annual leave. Article 7 of Working Time Directive 2003/88/EC states:

Annual leave 

Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.

The Working Time Regulations 1998 (SI 1998/1833), as amended, state:


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