Voluntary Overtime Can be Included in Statutory Holiday Pay, Northern Ireland Court of Appeal Rules

An industrial tribunal in Northern Ireland had been wrong to decide that voluntary overtime could not, as a matter of principle, be included in the calculation of statutory holiday pay. It will be a question of fact for each tribunal to determine whether voluntary overtime was “normally” carried out and was a sufficiently permanent feature of remuneration to require its inclusion in the calculation. 

In Patterson v Castlereagh Borough Council, Mr Patterson worked voluntary overtime i.e. overtime that his employer requested him to work but which he was not contractually obliged to perform. When he went on holiday, his holiday pay was calculated by reference to his basic pay only. He brought a claim for an unlawful deduction from wages, arguing that the pay he received for working voluntary overtime should have been included in his holiday pay. 

The tribunal rejected his claim and Mr Patterson appealed to the Northern Ireland Court of Appeal (there being no equivalent to the Employment Appeals Tribunal in Northern Ireland). The parties agreed that in so far as the tribunal had decided that holiday pay should be calculated without taking account of voluntary overtime, this was an error of law. The Court of Appeal concluded that this was what the tribunal had decided and it had been wrong to do so. There is no reason why voluntary overtime should not be included in the calculation of holiday pay. It will be a question of fact for each tribunal to determine whether or not voluntary overtime is “normally” carried out by the worker and is a sufficiently permanent feature of remuneration to require its inclusion in the calculation.

The case was remitted to the tribunal to hear further evidence on the overtime actually worked by Mr Patterson and to determine whether pay for voluntary overtime should have been included in his holiday pay.

The Employment Appeal Tribunal in Fulton and others v Bear Scotland and others ruled that compulsory non-guaranteed overtime (overtime which the employer is not obliged to offer but which the employee must work if asked) has to be included in holiday pay. It did not consider whether voluntary overtime has to be included and there have been no other binding decisions dealing with this question. The decision of the Northern Ireland Court of Appeal does not take the matter much further. The employer conceded that there is no reason in principle why voluntary overtime should not be included in holiday pay. The Court did not therefore hear full legal arguments on the issue of whether and in what circumstances voluntary overtime should be included. In any event, decisions of the Northern Ireland Court of Appeal are not binding in England and Wales or Scotland and are of persuasive authority only. 

Nevertheless, the tribunal’s decision on whether Mr Patterson’s pay for voluntary overtime should be included in his holiday pay calculation will be awaited with interest. He told the Court of Appeal that he worked 52 hours voluntary overtime over a 13 week reference period, an average of four hours per week.