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13/07/2015 Should employers include voluntary overtime when calculating an employee's holiday pay?

There has been an interesting case regarding voluntary overtime.  In the case of Patterson v Castlereagh Borough Council  the Northern Ireland Court of Appeal has held that voluntary overtime - that is, overtime which does not have to be offered by the employer or accepted by the employee - may need to be included in the calculation of holiday pay.

The Court of Appeal held that the Northern Ireland Industrial Tribunal (the equivalent of the English Employment Tribunal) had been wrong to find that voluntary overtime should not, as a matter of principle, be included in holiday pay. The Tribunal had erroneously interpreted the earlier EAT decision in Bear Scotland v Fulton which did not explicitly deal with voluntary overtime but instead focused on non-guaranteed overtime (that is, overtime which does not have to be offered by the employer but if offered must be worked).

On appeal, the Court held that, provided the voluntary overtime payment was part of the employee's "normal remuneration" and was paid with sufficient regularity, there was no reason why it should not in principle be included in the calculation of holiday pay.

Although this decision is not binding on the English courts, it will have persuasive authority in the rest of the UK. It does therefore open the door for other employees to argue for the inclusion of voluntary overtime in their holiday pay. This is not a surprising outcome but it is worth remembering that each case will be determined on its facts and with reference to the employee's particular circumstances and the pattern of work undertaken.