Calculation of holiday pay and voluntary overtime

18.09.2017

The EAT in Dudley Metropolitan Borough Council -v- Willetts and others has upheld a decision that voluntary overtime pay, out of hours standby payments, and call-out allowances must be included in the calculation of ‘normal remuneration’ for the purposes of statutory holiday pay, provided the payments are ‘sufficiently regular’.
The EAT stated that a payment will be ‘normal’ if it is paid over a sufficient period of time on a regular or recurring basis – whether this is this case will be a question of fact for the employment tribunal to resolve. In the present case, the tribunal had not made an error of law in finding that the voluntary overtime undertaken had been paid with sufficient regularity so as to amount to normal remuneration. By way of example, the court was content that a payment made one week per month, or one week in five, can be ‘normally’ made if it has been paid at that interval over a sufficient period of time.
This case has clarified one of the main outstanding questions from the earlier Bear Scotland case, and employers who have not updated their processes to calculate holiday pay in accordance with that case may now wish to do so.

Justin Costley

Author