In Dudley Metropolitan Borough Council v Willetts and ors, the EAT has upheld a Tribunal’s decision that regular payments for voluntary overtime had to be taken into account in calculating employees’ holiday pay.

A group of 56 employees had set contractual hours which represented their normal working hours. In addition, they could volunteer to perform additional duties which their contracts of employment did not require them to carry out. The employees contended that their holiday pay should have reflected voluntary overtime, amongst other matters. They won at first instance and their employer appealed.

The EAT dismissed the appeal. It considered ECJ case-law which states that there is an overarching principle that holiday pay should correspond to “normal remuneration” so as not to discourage workers from taking leave; and that the division of pay into different elements cannot affect a worker’s right in this regard. For a payment to count as “normal”, it must have been paid over a sufficient period of time. This will be a question of fact and degree. Items which are not usually paid or are exceptional do not count for these purposes, while items that are usually paid and regular across time may do so. In every case, if there is an intrinsic link between the payment and the performance of tasks required under the contract, that is decisive of the question whether it is included within “normal remuneration”. However, that is only a decisive criterion, not the only decisive criterion – the absence of such a link does not automatically mean that a payment need not be taken into account.

Applying those principles to the present case, the EAT held that the tribunal made no error of law in finding that voluntary overtime pay was paid with sufficient regularity to amount to “normal remuneration”.  

It should be noted that this will not apply in every case – it will depend on the facts each time and whether or not the payments for voluntary overtime form part of “normal remuneration”.

Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.