Northern Irish appeal court holds that voluntary overtime should be included when calculating holiday pay
Earlier this month, in the case of Patterson v Castlereagh Borough Council, the question of whether employers should include voluntary overtime when calculating holiday pay was considered by the Court of Appeal Court in Northern Ireland.
At the first instance ruling, the Industrial Tribunal concluded that voluntary overtime (this being overtime work which an employer has no obligation to provide and an employee has no obligation to perform) should not be included when calculating holiday pay, applying the legal principles established in the case of Bear Scotland v Fulton. Employers were able to breathe a sigh of relief following this decision; however this relief may be short lived.
The Court of Appeal in Northern Ireland has subsequently overturned the Industrial Tribunal’s decision; providing that employers may now also have to take regular voluntary overtime into consideration when calculating holiday pay. No guidelines were set down by the Court in relation to the appropriate tests employers should apply when determining whether certain voluntary overtime is required to be brought into the calculation, although the frequency of voluntary overtime will be key. The Court has stressed that there is a need to look at the facts of each case to determine whether voluntary overtime was carried out regularly enough to warrant inclusion in holiday pay calculations.
As this is a Northern Irish case, the decision is not binding on Courts and Tribunals in the rest of the UK; however it is a highly persuasive authority in these jurisdictions. Indeed, the words of Lord Justice Gillen in Patterson indicate that this latest judgment will ‘certainly will not be the last’ on holiday pay issues.
We reported earlier this year that regulations had been introduced which provide that all holiday pay claims presented on or after 1 July 2015 will have a two year limitation period for back payment of holiday pay. The same regulations also prevent employees from bringing statutory holiday pay claims as breach of contract claims through the civil courts; although contractual claims are still possible.
We can assist employers find a strategy for dealing with holiday pay issues, complaints and claims; and to determine what liabilities an employer may have.