Since the landmark decision in Bear, Hertel, Amec v Foutlon, Woods and others (the "Bear Case") that some forms of overtime need to be considered in the calculation of holiday pay for the four weeks' EU statutory holiday leave ("EU Holiday Pay"), there have been questions over whether or not this includes voluntary overtime. In the case of Patterson v Castlereagh Borough Council, the Northern Ireland Court of Appeal has ruled that under NI law it could and whilst this decision is not binding on the rest of the UK, British employers should take note.
In the Bear Case the decision was that "guaranteed" and "non-guaranteed" overtime should be included in the calculation of EU Holiday Pay. The contentious aspect of this decision was in relation to non-guaranteed overtime, i.e. that which the employer was under no obligation to offer the worker but, if offered, the worker had to accept. Questions soon followed as to whether or not the decision also applied to "voluntary overtime", i.e. that which the employer was under no obligation to offer and the worker under no obligation to accept. This type of overtime was not considered in the Bear decision.
Some argued that as the rationale behind the Bear decision was that workers should receive holiday pay for "any inconvenient aspect which is linked intrinsically to the performance of the tasks which the worker is required to carry out under his contract of employment", voluntary overtime should not be covered as it is not linked to a task which the worker is required to carry out under his contract of employment.
In Patterson the NI Court of Appeal held that there was no reason why voluntary overtime should not be included in the calculation of EU Holiday Pay, but it did need to be sufficiently regular and have some permanency so that it could be said to be part of the worker's "normal remuneration". Unfortunately the Court did not give any guidance on how regularly a worker had to receive overtime pay in order for it to be included as part of "normal remuneration".
We cannot say for certain that the British Courts will take the same approach to this issue and it should be noted that, for various reasons, the NI Court of Appeal itself cautioned against too much reliance being placed on its judgment. However, this case is a salient reminder that the Bear Case did not say that voluntary overtime is not to be included – it simply did not consider the point. There is an element of common sense in saying that, if overtime is sufficiently regular, even if not strictly required under the contract of employment, then it should be treated as part of a worker's "normal pay" for the purposes of EU Holiday Pay. We now have to wait for a judgment in Britain to see whether this approach is followed, but in the meantime employers should appreciate the risk of discounting voluntary overtime for the purposes of calculating EU Holiday Pay.
Click here to read our previous article on the implications of the Bear Case.
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