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Dudley Metropolitan Borough Council v Willetts
The Employment Appeal Tribunal (EAT) has held that pay for voluntary overtime, normally worked, is 'normal remuneration' for the purposes of calculating holiday pay.
The claimants were quick response operatives working for the Council. They carried out work as electricians, plumbers and roofers, who, as well as working day jobs, also worked entirely voluntary overtime which paid additional standby and callout allowances.
Relying on the well-known cases of 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 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.
In Practice
Holiday pay must correspond to normal remuneration. Put simply, 'normal pay' is that which is normally received over a period of time. Employers should consider what a worker would have earned if they had not taken leave when calculating holiday pay.
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