Holiday Pay - Voluntary Overtime

Thanks to Gareth Walls of A&L Goodbody NI for preparing this case summary

Should employers include voluntary overtime when calculating an employee's holiday pay?

Cautiously, yes, held the Court of Appeal in Northern Ireland in the case of Patterson v Castlereagh Borough Council.

The industrial tribunal at first instance held that voluntary overtime – being overtime which the employer is not obliged to provide and the employee is neither obliged to perform – should not be included in holiday pay calculations, which was welcome news for employers across the country post Bear Scotland. However (and somewhat unsurprisingly) the decision was appealed to the Northern Ireland Court of Appeal (there being no Employment Appeal Tribunal in Northern Ireland).

The Northern Ireland Court of Appeal held that the industrial tribunal's determination in respect of voluntary overtime was erroneous. Unhelpfully, the Court of Appeal did not provide guidelines as to the tests an employer needs to apply in determining holiday pay and stressed that this was a 'question of fact' for each tribunal to determine, based on the particular circumstances of each individual case and remitted the matter back to the industrial tribunal to determine. Lord Justice Gillen also acknowledged that this latest judgment in the myriad of holiday pay related cases 'certainly will not be the last'.

This judgment opens the door to the inclusion of voluntary overtime, but employers still will not have sufficient clarity on its application.

Although decisions from the Northern Ireland Court of Appeal are not legally binding on the courts and tribunals in England and Wales, employers should be aware of the potential ramifications of this most recent decision, as a persuasive authority, in the continuing holiday pay saga.