14.04.15 The Calculation of Holiday Pay Reaches the Courts Yet Again

The calculation of holiday pay is to be considered by UK Courts yet again on 17 June with the Northern Ireland Court of Appeal hearing an appeal in the case of Patterson v Castlereagh Borough Council .

The appeal is against a decision of a Northern Ireland Industrial Tribunal which ruled that the Working Time Directive does not require voluntary overtime to be taken into account when calculating holiday pay.

The case raises the question;

• Under the Working Time Directive must voluntary overtime be taken into account when calculating holiday? This is overtime that the employer is not obliged to offer and which the worker is not obliged to accept.

Mr Patterson worked under a Contract of Employment as an Assistant Plant Engineer. Under this contract overtime was voluntary – the employer had no obligation to offer overtime and Mr Patterson was not obliged to work it, when offered. From time to time Mr Patterson did work overtime pursuant to his contract which was ignored by the employer when calculating holiday pay. Mr Patterson did have a separate and distinct contract with the same employer for relief work where there was never any requirement for the employer to offer work nor was there an obligation on Mr Patterson to accept the work.

In order to reach that decision the Industrial Tribunal took into account the decision in Fulton v Bear Scotland, although the Employment Appeal Tribunal’s (EAT) decision is not binding on Industrial Tribunals in Northern Ireland). In the Fulton case the EAT ruled that non-guaranteed overtime (overtime that the employer was not obliged to offer but which the claimant was required to do, if asked) should be included in the calculation of holiday pay but did not hold that voluntary overtime should be excluded.

The Industrial Tribunal agreed with the EAT’s interpretation of the law that overtime that the worker is obliged to do should be included in the calculation however, decided that the kind of voluntary overtime in issue in Mr Patterson’s case should not be included in the calculation of holiday pay.  The appeal against this decision will be heard on 17^th June.

The outcome of the appeal will only be binding in Northern Ireland and not the rest of the UK, however Northern Ireland Court of Appeal hearings are considered persuasive by British Courts and Tribunals where there are no existing binding cases on that point.