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August 2017 Newsletter - Holiday Pay: Voluntary Overtime

Posted on Friday 4th Aug 2017

Holiday Pay: Voluntary Overtime

 

We are aware that some of our clients, when calculating holiday pay, do not take into account payment for overtime worked in the preceding period because they term it “voluntary overtime”. That is, holiday pay is calculated at the contractual rate. Previous Newsletters in July 2015 and May 2016 have set out our view that this approach is not in accordance with the legal situation.

Further support for the view that voluntary overtime, normally worked, is ‘normal remuneration' to be taken into the reckoning when  calculating holiday pay is provided by  Dudley Metropolitan Borough Council v Willetts.

The employees were electricians, plumbers, roofers and similar working for the Council, who, as well as working day jobs, also worked entirely voluntary overtime which paid additional standby and callout allowances. They were termed quick response operatives.

Dudley Council asserted that overtime payments were not 'normal remuneration' because they lacked an intrinsic link to the performance of tasks required under the employment contract. The case went to the Employment Appeal Tribunal and the EAT disagreed with the Council. It found a clear link between the payments and the performance by the operatives of their duties because when they were working the overtime they were performing the same tasks as under their contracts.

The overriding finding is a restatement of the legal position that holiday pay must correspond to ‘normal pay'.  (However, this only relates to pay for the first 4 weeks of holiday under the Working Time Directive not the whole of the worker’s holiday.) Clients need to ask the question what would the worker have earned if s/he had not taken leave? If his or her normal pay is so influenced by overtime working then holiday pay should reflect this using a 12-week reference period to calculate average earnings. However very limited occasional overtime is unlikely to be classed as part of  normal pay even if in the preceding 12 week reference period there was some overtime work. 

 

Data Protection

 

Our previous Newsletter in May 2017 contained information on changes to data protection legislation to come into force in May 2018. These changes will require that our handbooks contain detailed reference to the new law and in preparation for this we have posted on our website a data protection section. Not all the examples of data in that section will be applicable to all clients and we would ask that you read through the section and delete those elements that are not relevant to your business. By the same token if there is something missing from it which you want to add, please make alterations to the section as you see fit.

Please email the annotated section to ruth@actonjennings.com

We will make the amendments to handbooks at renewal.

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