Holiday pay (again)

29 June, 2015
by: Cripps Pemberton Greenish

The vexed question of what to include in holiday pay has hit the courts again. This time, the Northern Ireland Court of Appeal (NICA) has considered whether voluntary overtime should be included in the holiday pay calculation. The case of Patterson v Castlereach Borough Council is not binding on the English courts and tribunals but will be considered by them as there is no existing binding authority on this point.

The question before the NICA was whether voluntary overtime (which the employer is not required to offer and the employee is not required to accept) should be included in the calculation of holiday pay. Previously, the Employment Appeal Tribunal held in Bear Scotland that non-guaranteed overtime (where the employer is under no obligation of provide overtime but, if it does so, the employee is required to work) should be included in the holiday pay calculation. The Patterson decision goes further and holds that voluntary overtime may be included in holiday pay calculations. It depends on the facts in each case. Employers need to consider whether the voluntary overtime was normally worked and ‘carried on with the appropriately permanent feature of the remuneration to trigger its inclusion within the calculation.’ Unfortunately, this does not provide employers with clear guidelines on the issue so we still cannot say with certainty whether voluntary overtime should be included in holiday pay calculations.

Whilst on the subject of holiday pay, don’t forget that the Deductions from Wages (Limitation) Regulations 2014 come into force on 1 July. These impose a cap of two years on retrospective holiday pay claims.