Principle established that voluntary overtime should be included in holiday pay

Patterson v Castlereagh Borough Council [2015] NICA 47

The principle

The Northern Ireland Court of Appeal has held that there is no reason in principle why voluntary overtime should not be included in holiday pay, if it is normally carried out and is an “appropriately permanent feature” of the worker’s remuneration.

The Court of Appeal was judged the initial tribunal had been wrong to make an unequivocal finding of principle that voluntary overtime does not need to be included in holiday pay.

However, the judgment goes on to stress that it will be a question of fact for each tribunal to determine whether or not the voluntary overtime has the necessary features to be included. To trigger its inclusion in the holiday pay calculation, the worker’s overtime must be “normally” carried out, and be an “appropriately permanent feature” of the worker’s remuneration.

Implications for employers

As a Northern Ireland case, this decision is not binding on courts and tribunals in England, Wales and Scotland. However, it will be cited in holiday pay cases in those jurisdictions and may be persuasive.

While the decision shows that voluntary overtime may have to be included in holiday pay, when it does is still open to debate in each individual case.

To require inclusion, the overtime has to be regular and permanent enough to have become part of the worker’s “normal remuneration”.

The case

Mr Patterson initially carried out occasional engineering work for Castlereagh Borough Council as a casual worker. He became a full-time employee in 2003. Although his contract of employment was silent on overtime, it was clear that the employer was not obliged to offer overtime, nor was Mr Patterson required to undertake overtime when it was offered.

The industrial tribunal applied Bear Scotland and concluded that, since Mr Patterson’s overtime was “voluntary overtime” and not obligatory “non-guaranteed overtime”, the employer was not required to include the overtime in the calculation of his paid annual leave.

The industrial tribunal therefore rejected Mr Patterson’s claim for unlawful deductions from wages. Mr Patterson appealed to the Northern Ireland Court of Appeal.

The Northern Ireland Court of Appeal allowed the appeal. However, it urged that its judgment should be read with a degree of caution, in light of the employer’s concession in the Court of Appeal hearing that there is nothing in principle to prevent purely voluntary overtime from counting towards holiday pay in appropriate circumstances