Important ruling on holiday pay could have a big impact on York’s businesses, says Hethertons

Jo YeatesOne of York’s leading employment solicitors, Jo Yeates, has said that the recent ruling in the case of  Willetts –v- Dudley Metropolitan Borough Council could have a big impact on holiday pay in the UK.

When it comes to paying holiday pay employers must pay ‘normal remuneration’ however, until a recent Employment Appeal Tribunal (EAT) case it was  not clear whether voluntary overtime should be considered ‘normal’ under the current rules.

The EAT judge confirmed that voluntary overtime should be considered as part of ‘normal’ pay for workers and should therefore be included as part of the calculation for holiday pay. The council employees, which included plumbers, electricians and quick response operatives, were contracted to do 37 hours a week, alongside two to four hours of overtime.

However, they often performed other duties on a voluntary basis, including  standby shifts and call-outs.

The employees had argued that they were earning around £6,000 a year in addition to their basic salaries, but this extra income was not reflected in their holiday pay.

The Employment Appeal Tribunal decided that to exclude such payments from holiday pay results in a financial disadvantage to workers, which might deter the taking of annual leave – a right which is enshrined in EU law.

Responding to the ruling, Jo, Head of Employment Law at Hethertons Solicitors  of York and Boroughbridge, said: “This judgement highlights that employers have to consider carefully what an employee’s “normal pay” is when calculating what they should be paid when they take holiday.”

“It is now clear that when calculating holiday pay employers must work out the employees’ average actual pay including compulsory and voluntary overtime, call out payments, out of hours payments or any other payments normally paid when at work, if they are paid on a regular basis”.

Jo believes that many employers in Yorkshire and beyond are  relying on out-dated approaches to  holiday pay and is calling on them to check their holiday pay calculations and the terms of the employment contracts.

“To avoid potential claims it is critical that businesses assess their holiday pay and payroll processes to ensure they are paying their employees correctly” added Jo.

If you would like to know more about Hethertons’ range of employment law services, please call 01904 528200.