50 Shades of Holiday Pay

25 February 2015

Toni Fitzgerald Gunn reviews the calculation of holiday pay and the effect of Bear Scotland in Northern Ireland

Whilst the media is in a frenzy about the release of the most hotly anticipated movie of the year, we employment lawyers are (sadly) more concerned about the effect a recent English EAT decision will have on the old age question – what should be included in the calculation of holiday pay?

Employers will, to some extent, be pleased to hear that the Industrial Tribunal in the Northern Ireland case of Robert Patterson v Castlereagh Borough Council (CBC) (CRN: 1793/13) has decided that voluntary overtime is not to be included.

Mr Patterson is engaged by CBC by way of two separate contracts; initially as a relief/casual worker and, a short time later, on a full time contract of employment as an assistant plant engineer. Mr Patterson is employed by both contracts concurrently.

Mr Patterson lodged a claim, alleging unauthorised deduction from wages in relation to holiday pay in respect of both his casual work and overtime work carried out under the full time contract of employment.

The Tribunal was satisfied “that, pursuant to his contract of employment, the Claimant carried out overtime as an assistant plant engineer and has been paid for the said hours worked, as overtime, at the rate of time and a half.” The Tribunal was further satisfied “on the evidence before it, which was not disputed, that any such overtime carried out by the Claimant, however regular, was voluntary and non-compulsory. The Claimant was not required to do the overtime, if it was offered by the respondent and there was no requirement on the respondent to offer it under the contract.”

Therefore, relying on the differentials provided in Fulton & Others v Bear Scotland CRN: 4112472/12 & Ors (regularly referred to as the ‘Bear Scotland’ case) in relation to overtime, which are:

 

  • non-guaranteed – overtime which an employer is not obliged to offer but if offered a worker is contractually obliged to accept;
  • guaranteed – overtime which, contractually, the employer is obligated to offer and the employee is obligated to accept (and, if not offered, the employee is still entitled to pay in respect of same); and
  • voluntary – overtime which the employer asks the employee to do, but the employee is free to refuse.

The Tribunal determined that “following the decision and reasons set out in Bear Scotland, since voluntary overtime was not part of his ‘normal remuneration’ for the purposes of the (Working Time Directive), it was not therefore required to be reflected as an average taken over an appropriate reference period.”

 

This aspect of the decision has however been referred to the Court of Appeal and, as such, the position in relation to overtime and annual leave will remain unclear for the foreseeable future.

Further, employer’s beware - the Tribunal determined, in respect of the Claimant’s separate casual contract that, “the fact that the claimant may have more than ‘one job’ for the respondent, but under two separate contracts, does not prevent…the application of the relevant provisions in relation to the calculation of paid annual leave, where relevant and appropriate, in respect of each job carried out by him for the respondent under each contract. The relevant provisions in relation to holiday pay apply to each contract and must be applied.” (Our emphasis)

Therefore, whilst the decision provides welcome clarification, the issue of calculation of holiday pay, unfortunately, still remains…50 shades of grey.

 

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