Should we include regular average voluntary overtime in holiday pay?

Q. The Employment Appeal Tribunal in England recently held in the case of Dudley Metropolitan Borough Council v Willetts that regular average voluntary overtime should be included in holiday pay. Could you comment on what that means in Northern Ireland, if indeed it were to be applied here in Northern Ireland tribunals?

This was an interesting decision in the case of Dudley Metropolitan Borough Council v Mr G Willetts and Others [2017].

The basic position and premise behind Dudley is really that the employer when looking at holiday pay, it should be reflective of what the employee is normally working. So, there’s a couple of things just to talk about first of all in respect of the Dudley decision before we get into the application of it here in Northern Ireland.

We’re really looking at voluntary overtime, first of all, the overtime that’s done on a voluntary basis and how that’s calculated then for the basis of the working holiday whenever the employer is working on the holidays. Dudley says that it should be reflective in the holidays that they receive. The basic position is that you would take your standard 12-week holiday period but Dudley does, in fact, suggest that it should be calculated over a five-week period.

But that’s one way of looking at it, and certainly I think that you could take your normal 12 weeks and really looking at what’s reflective of what the employee is doing. So, it’s things really, I think, the practical aspect of what we’d be looking to, what is the normal course of action for the employee? Are they working, for instance, 9:00 to 5:00 consistently and they every so often are doing some overtime and they’re doing it voluntarily or is it the actual fact that they’re working from 9:00 to 6:00 every day and their contract might say 9:00 to 5:00, but the additional hour they’re doing voluntarily. This decision is very clear that the voluntary aspect of it should be included within the holidays.

Practicalities for the employer in respect of that is really about, I think, for the employer to ensure that it is monitoring and tracking what employees’ hours that they’re working. There’s various ways that that happens throughout different businesses.

For instance, in our business here, we have a fob where we swipe in and swipe out of the building, and not always effective for us because we do things like going to court and maybe going outside to see clients, but it gives an indication of when we’re here and when we’re not here. Other people have clocking in systems and others will have sign in sheets and things like that. It’s important for the employer to keep an eye on those things and to look at them being reflective.

Q. An employee is contracted for, say, eight hours per week. They on occasion work extra hours. They take a week’s holiday and then get paid their average earnings over the last 12 weeks and they say the average earnings might equate to 10 hours because they take some extras every week. So, would the holiday pay in that case following Dudley be 8 hours or 10?

Seamus: The position I would say, if there’s a regular occurrence, again, you’re looking at the important part of Dudley, which says that it should be reflective of the normal position. If the situation is that they are working the ten hours, their holiday pay should be reflective of that.

Scott: So, it really comes down to this normality, and what does normal look like, are you used to getting the money?

Seamus: Yes. Looking at what is the expectation of the employee. Here is the expectation about even though it’s voluntary, when it comes to their holiday under Dudley because all employees are smart and wise now. They will go online. They will be aware. Their view will be, “Even if I’m doing this on a voluntary basis, I do expect get some return and respect when it comes to my holidays.” If it’s regular, the holiday should reflect that.

Scott: That’s only the first four weeks of any one year that are covered is it, or what about the contractual situation?

Seamus: Yes. I think that Dudley talks about the aspect of 20 days when it comes to European Union, but I think that it’s a bad situation to look at it on the basis of a broad approach when you’re coming to the number of weeks and things like that. It’s best to...you can go back your 12 weeks, certainly, in terms of working out what the average might be, but if there’s a clear understanding between the employee or there’s an acceptance by the employee that overtime has been carried out, certainly I think there will be an expectation from the employee that that should be reflected in their holiday pay.

Scott: For all contractual holidays as well as EU protected...

Seamus: Yes. That’s how I would be looking at this.

Q. An employee is also contracted for eight hours per week, but this particular employee doesn’t do any extra hours and has on occasion been late for work and therefore only paid for the hours worked. So, when they calculate their holidays over the 12-week period, their average is at seven and a half hours. So, the question here is is it the average earnings that’s payable, even if it equates to lower than the contracted hours and as would be the case where there’s a wage rate change as well?

Seamus: This is an interesting one. You can see already from Dudley how the minds of HR experts and lawyers are starting to go and look at these things. My concern would be that if there’s a contractual period and it’s specified in the contract of employment for eight hours, that that should be reflective of the holidays. You have someone that is late for work or there’s a consistency in respect of the lateness, for me that’s a model that should be dealt with using the disciplinary policy and procedure if appropriate and necessary.

Where there is an acceptance by the employer that although the contract says, for instance, seven hours, but the person is only working six hours, eight on occasion, but say they’re only working six, if the custom and practice, and certainly if they’re doing it over a lengthy period of time, to me, the contractual position has changed and has drop down to those six hours should be reflective.

But I would be a bit concerned about someone that is just a wee bit late for work every so often and they’re losing half an hour and there’s no consistency to it and it’s certainly not, again, you have to look at the normal pattern of work. If it isn’t a situation where it’s not considered to be the normal position, then you would be sticking to the contractual basis of what is there.

Scott: But sometimes it might depend on what the contract says. It may say 'up to eight hours'.

Seamus: Yes, indeed. Always important to carefully read what the contract says and what the actual term and condition is. Again, as you know, what the interpretations of that might be as well.