Latest News

  • Published:
    23 May
  • Area of Law:

Further expansion in the ever widening net of holiday pay

It only feels like yesterday when employers of all sizes and sectors were reeling over the Bear Scotland holiday pay decision. Since that decision, the scope of what employers should include when calculating holiday pay has widened, and the recent decision in White & Others -v- Dudley Metropolitan Borough Council is no exception.

What did the case say?

This case involved 56 Council employees whose role it was to repair and maintain Council housing. They were employed to work 37 hours per week plus contractual overtime. In addition, they carried out purely voluntary overtime at weekends, which also involved the employees being on standby for out of hours emergency work and on-call if any emergency work needed to be carried out.

Whilst the Bear Scotland case specifically failed to address the issue of purely voluntary overtime (overtime that the employer is under no obligation to offer, and even if it is offered, the worker is under no obligation to undertake), this case makes it clear that purely voluntary overtime should be included in the calculation of holiday pay. However, it has gone further by also confirming that standby payments and call out payments should be included in the calculation of holiday pay, regardless of whether they are done voluntarily, as long as the employee can demonstrate they are performed with such regularity so as to constitute ‘normal‘ pay. This does, however, only relate to the first 20 days holiday in each holiday year.

What should I be doing now?

This is another reminder of the direction of travel with regard to the law in this area, the driving force of which is a European ethos that holiday is not a luxury, but rather a necessity for the purposes of health and safety. Workers should not be put off from taking holiday because they will be financially worse off than they would be were they at work.

Whilst this case may yet be appealed, if your organisation made changes to its processes following the Bear Scotland case, it will now simply be a matter of reviewing work patterns to assess the regularity of any purely voluntary overtime, standby and call out time, and subject to this assessment, amending your payroll processes accordingly.

Equally, even with the possibility of a Brexit looming in the background, UK Courts and Tribunals are unlikely to depart significantly from the influence of Europe at this time.

For more information on the issues raised above or any other employment related matter, please contact a member of the Employment Team.

"This is exactly why we like to work with people who understand the industry and can identify potential issues and create solutions."

Jon Saltinstall, Senior HealthCare Banking Consultant, Lloyds Bank