Holiday Pay – NI Court of Appeal unlocks the door for voluntary overtime

The Northern Irish Court of Appeal has held in Patterson –v- Castlereagh Borough Council, that the Belfast Tribunal ruled in error on its interpretation of Bear Scotland.

In short, the Court of Appeal said that there is no reason why voluntary overtime cannot constitute part of a "normal working week" – and so it may count towards holiday pay. The door has been unlocked, but not yet opened. The case has been remitted back to the Industrial Tribunal for further review. 

The decision is hardly surprising given that the parties had accepted at the hearing that the Tribunal had "fallen into error" – whether because of a misinterpretation of Bear Scotland or because of the lack of necessary evidence before it.

A link to our earlier article on the arguments raised at the hearing earlier this month is accessible here.

Unfortunately, the Court offered no further guidance on what constitutes a "normal working week"; it said that this will depend on the facts in each case. The issue for a tribunal will be to "determine whether or not that voluntary overtime was normally carried out by the worker and carried with it the appropriately permanent feature of the remuneration to trigger its inclusion in the calculation".

Whilst the Judgment may not necessarily be welcome news for employers, it does not say that voluntary overtime must be included in the calculation of holiday pay. As anticipated, the true battleground is likely to be over what constitutes 'normal' and 'regular' in terms of the actual voluntary overtime worked.

Employers in Northern Ireland will be bound by this judgment and should review their voluntary overtime arrangements to establish whether they could be exposed in any way.

The decision of the Court of Appeal is not binding in Great Britain, but will be a highly persuasive authority. It is also currently the only higher court judgment on this issue.

Given how the principles in caselaw have been trending since British Airways Plc –v- Williams [2012], it would be surprising if any tribunal or court in Great Britain would arrive at a different conclusion to the NI Court of Appeal today. Employers in Great Britain would therefore be prudent to similarly review their voluntary overtime arrangements to assess the potential for them to fall within the "normal remuneration" bracket.

The Court of Appeal commented that its analysis of this issue had to be brief given the limited evidence that had been placed before the initial Tribunal. It said that it recognises that "on another day, fuller argument on this issue may transpire". This chapter in the holiday pay tome is just beginning.

For further information please contact a member of our Employment team.

Date published: 26 June 2015