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Employers must now include voluntary overtime in holiday pay calculations 3 August 2017
A decision by the employment appeal tribunal is the first to confirm that payments for entirely voluntary duties, should be included in the calculation of workers’ holiday pay.
Unite Union has called on employers to urgently get their ‘house in order’ over holiday pay after it secured a landmark legal victory meaning employers must now include voluntary overtime in holiday pay calculations.
The ruling is of major significance to workers nationally, many of whom receive payments for voluntary duties while working, but do not receive those payments when they take holiday. It sets a legal binding precedent which employment tribunals across the UK are obliged to follow. The decision by the employment appeal tribunal on an appeal by Dudley Metropolitan borough council is the first to confirm that payments for entirely voluntary duties, such as voluntary overtime, standby, call-out work and travel-time linked to that work, should be included in the calculation of workers’ holiday pay. It builds on a previous groundbreaking case taken by Unite legal services in 2014 that resulted in a separate employment appeal tribunal ruling covering holiday pay for workers who are contractually obliged to do overtime. The case against Dudley council involved 56 Unite members employed by the council as tradesmen, including plumbers, electricians and carpenters, working on maintaining Dudley’s housing stock. They worked regular overtime, including on Saturdays, on a purely voluntary basis. They also elected to go on a standby rota every four weeks to deal with emergency call-outs and repairs. In some cases their earnings for this additional voluntary work amounted to around £6,000 a year on top of their basic salary. While they would receive these payments while working, these amounts were not included in their holiday pay. The underpayments of holiday pay suffered by each claimant varied depending on how much voluntary work they performed between around £350 and £1,500 per year.
Unite assistant general secretary for legal services Howard Beckett, said:
“The ruling means unscrupulous employers no longer have carte blanche to fix artificially low levels of ‘basic’ hours and then contend the rest of time was ‘voluntary’ overtime that did not have to be paid in respect of annual leave.
Unite will be liaising with Dudley council and its legal team over reaching a satisfactory settlement for our members. In the meantime we would urge other employers who have been fleecing workers of their holiday pay to get their house in order or face legal action…”
CIPP comment The CIPP run a practical half day course which includes an overview of the legal framework that governs holiday pay and entitlement, as well as worked exercises to explore the calculations thoroughly. This course will always include the most up to date information to account for ongoing case law. Visit the training area of our website for full details.
The Chartered Institute of Payroll Professionals
Policy News Journal
cipp.org.uk
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