The Court of Appeal in Northern Ireland cautiously said ‘yes’ in the case of Patterson v Castlereagh Borough Council.

Background

Mr Patterson regularly worked overtime on a voluntary basis for which he was paid at the rate of time and a half. His holiday pay was calculated by reference to his basic hours only. Mr Patterson claimed that he suffered an unlawful deduction from wages.

In the first instance, the industrial tribunal rejected Mr Patterson’s claim and said that voluntary overtime – that is, 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.

Interestingly, the Council had conceded at tribunal that there was no reason why voluntary overtime should not be included in paid statutory leave. However, the tribunal did not make a finding on this point.

On appeal, the Court of Appeal found that the industrial tribunal had made an error in its decision making, and sent the case back to the industrial tribunal to consider further evidence of the overtime actually worked by Mr Patterson.

The Court of Appeal said that it is a ‘question of fact’ for each tribunal to consider whether or not voluntary overtime is normally carried out by a worker and whether the remuneration received is a sufficiently permanent feature of the remuneration to trigger its inclusion in the calculation of statutory holiday pay.

Implications

Decisions from the Northern Ireland Court of Appeal are not legally binding on the courts and tribunals of England and Wales, though they have persuasive authority. Whilst employers should be aware of the potential ramifications of this decision, this case leaves open the question of whether voluntary overtime amounts to normal remuneration and therefore attracts holiday pay.

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Updates: For employers: Holiday and working time | Pay and pensions | For employees: Holiday |
Tagged with: Holiday | Pay |

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