holiday pay and overtime

[Russe11]

Despite recent rulings there still appears to be a grey area about holiday pay and overtime hours counting towards a weeks pay, that is with regard to volentary overtime over contractual hours(though I am aware this has been cleared up in Northern Ireland).

 

My question is, under current English and Welsh Employment contracts what would be the correct calculationfor the following situation

 

Contracted hours 37.5

Worked hours per week 48 (this has been normal for the last 3 years)

 

the overtime has been volentary above contracted, the employee has always done the overtime and there for it can be demonstrated that 48 hrs was a regular worked week.

 

 

should the holiday entitlement be 37.5 hours per week or based upon a 12 week reference period when holiday is taken since it would be a representation the employees normal weeks pay.

[Sidewinder]

Your belief would seem to be the correct one, although as you have suggested it isn't always as straightforward as that.

 

The recent case law has affirmed the situation for the calculation of holiday pay in certain situations regarding overtime but it cannot be applied to ALL overtime. Much still depends on the contract, either where there is a clause referring to overtime or by implication through obligation.

 

The root of the issue is whether the overtime is compulsory or whether the employee has the right to refuse it when offered. How is the overtime paid? Is it a separate item on the payslip or is it detailed as 'Overtime'. Is it automatically rota'd or is the employee asked if they would like to do it? Is it paid at a separate, higher rate? What would be the situation if the employee was to refuse the overtime offered? These are all relevant as to whether the overtime could truly be classed as 'voluntary', 'guaranteed' or whether even if not 'guaranteed' the employee has an obligation to work if the time is 'offered'

 

There is an added complication in that the recent rulings can only be applied to 4 weeks of an employee's holiday even if the argument is successful. The basis of the claims rest on the terms of the WTD which only affords 4 weeks holiday a year, not the 5.6 weeks that UK employees are given.

 

The main problem is that even where a compulsive case can be made for holiday pay to reflect overtime worked, the employer may well decide that the overtime should not be offered to the same level in future. By implication that might suggest that 48 hours a week should be guaranteed which can become very expensive in the long term were there to be a downturn in the business!

[Russe11]

Hello Sidewinder, nice to see you are still here giving advice (remember reading posts years ago).

 

 

 

The type of overtime is volentary over the contractual obligated hours, some staff have contracts which exclude the compulsary overtime.

 

Its really the question does overtime that is regular part of a weeks pay likely to be counted?

 

As I understand any claim for requiring tribunal ruling will likely be suspended until the decisions are finalised when ever its set to be looked into.

 

Do you know any dates or hearing relevant are due to be heard?

[becky2585]

At the moment I'm not aware of any more cases on this issue, which is frustrating.

 

SWs advice is legally spot on. However, I find it easier to take a more simplistic view.

 

Truly voluntary overtime isn't taken into account. However, the simplistic view is that any overtime forming part of "normal remuneration" should be included. If it's overtime that has been offered and accepted with the same degree of regularity then it may not be voluntary in practice. The law is so grey in this area though that each case would be decided on its own merits - meaning it could go either way!

[becky2585]

Actually I may have jumped the gun slightly there. It seems the Lock appeal was heard around a week ago - so you may get some clarity soon.

[Russe11]

I was of the understanding that the Lock appeal was on the basis whether commission should form part of normal renumeration.

 

Is it likely clarification will be made regarding other areas.

 

Part of my renumeration comprises of advance bonus payments and the remaineder paid as one off payment should the bonus be achieved, therefore I can't see how commision/bonus payments can't form part of my normal pay.

 

Suppose this is going to take a long time to co e to a resolution.

 

another point is since there is a limit on bringing an ET within 3 months, the limitation of 2 years for underpayments and the length of time these hearing are likely to be spreadout, then if a claim is made how can it ever work logistically in a timely matter?

[becky2585]

My understanding is that the Lock appeal will not just deal with commission, but will also seek to clarify the Bear Scotland case and whether words can be read into the Working Time Regulations to include voluntary overtime - so hopefully there will be a definitive view soon.

[Russe11]

I have looked up recent hearing and can see it was heard on the 8th and 9th

 

Mr Justice Singh, sitting alone, said at the end of the two-day EAT hearing that he would circulate his draft judgment to the parties in the usual way. With employment cases of this complexity, it normally takes around three months for the judgment to be published.

 

taken from PersonelToday