The ongoing saga of holiday pay takes another turn following a recent Employment Appeal Tribunal decision, which has decided that pay for voluntary overtime along with a number of other payments may need to be counted when calculating holiday pay.
The key points are:
- Payments in respect of overtime, whether compulsory, non-guaranteed or voluntary, are classed as normal pay.
- To count as “normal” it must have been paid over a sufficient period of time, which will depend on the particular circumstances.
- Payments which are not usually made or are exceptional do not count.
- Even if there is no intrinsic link between the payment and the performance of tasks under the contract, the payment may still need to be counted for holiday pay purposes.
- Payments for voluntary work which must be performed once the worker starts an overtime shift or for standby duty which is normally worked should also be included when calculating holiday pay.
- If payments for voluntary shifts, standby or callout payments are “normally paid”, they must be included in holiday pay to ensure there is no financial disadvantage.
Out of hours payments
- If out of hours payments are made over a sufficient period of time on a regular basis, e.g. one week each month, then they will also count.
Essentially, holiday pay should correspond to “normal remuneration”, which means pay normally received. Payments should not be excluded so as to deter or potentially deter the taking of annual leave, which is an essential element of EU social law.