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Holiday Pay: Voluntary Overtime

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Is pay for voluntary overtime, normally worked, 'normal remuneration' for the purposes of calculating holiday pay?

Yes, held the EAT in Dudley Metropolitan Borough Council v Willetts.

The Respondents were Quick Response Operatives working for the Council. They were electricians, plumbers, roofers and similar who, as well as working day jobs, also worked entirely voluntary overtime which paid additional standby and callout allowances.

Relying on Williams and Lock, Dudley Council asserted that overtime payments were not 'normal remuneration' because they lacked an intrinsic link to the performance of tasks required under the employment contract.

The EAT rejected this narrow interpretation. To exclude such payments from holiday pay results in a financial disadvantage to workers which deters or might deter the taking of annual leave which is a pillar of EU social law. The EAT also found a clear link between the payments and the performance of their duties because when they were working the overtime the operatives were performing the same tasks as under their contracts.

Holiday pay must correspond to normal remuneration. Put simply, 'normal pay' is that which is normally received. Normal means paid over a sufficient period of time. What would the worker have earned if they had not taken leave?

Thanks to Karen Jackson of didlaw for preparing this case summary