Tribunal confirms voluntary overtime must be included in holiday pay

The Employment Appeal Tribunal has confirmed, in the case of Dudley Metropolitan Borough Council v Willetts (and others), that employees who receive regular payments for voluntary overtime should have those payments taken into account when their holiday pay is calculated.

The EU Working Time Directive requires that holiday pay must be based on ‘normal remuneration’. The definition of normal remuneration has already been held to include commission pay and guaranteed overtime, but this is the first ruling that addresses the issue of voluntary overtime.

The EAT stated that voluntary overtime, worked for a sufficient period of time on a regular and/or recurring basis, should be included in holiday pay accrued under the Working Time Regulations. Failure to pay such overtime during periods of holiday would put a worker at a financial disadvantage, and may, therefore, deter a worker from taking holiday.

An employment law masters’ graduate with extensive experience in employee relations and negotiations, Helen helps the wider employment law team advise a wide range of business clients.