Dudley Metropolitan Borough Council

Dudley Metropolitan Borough Council v Willetts and others

Good morning and welcome back to your weekly case law update. Last week’s newsletter had features on the abolition of Tribunal Fees, the Taylor Review and the BBC Gender Paygap Data – a landmark month for employment law. This week’s case, Dudley Metropolitan Borough Council v Willetts and others, is about holiday pay.

Several big holiday pay cases, including Lock v British Gas, Neal v Freightliner and Bear Scotland v Fulton, have been going through the Courts since as far back as 2013. The question in all of them is whether holiday should be calculated to include normal pay (overtime, commission etc.) or just basic pay.

Today’s question:

Should regular voluntary overtime be included in holiday pay calculations?

In this case, the Claimants, Mr Williets and 56 other employees of Dudley Metropolitan Council, the Respondent, performed various maintenance roles on the Respondent’s properties. They were all contracted to work 37 hours per week, plus 2-4 hours of overtime. On top of this, each Claimant undertook call-out and out-of-hours work as part of voluntary overtime.

Each Claimant worked a different amount of voluntary overtime but it was estimated that some worked an extra £6,000 worth of hours each year. They believed their Holiday Pay should include this overtime – and the amount of time spent traveling to perform it – should be included in the calculation of their holiday pay.

The Claimants initiated Tribunal proceedings and the ET allowed the claim. The Respondent appealed but the EAT rejected the appeal. It held that in accordance with the Working Time Directive there is no distinction between contractual work and extra work that is voluntarily undertaken. Therefore, voluntary and stand-by work should be included in holiday pay calculations so that the employee does not suffer detriment by taking holiday.

The takeaway point:

Yes, regular voluntary overtime should be included in holiday pay calculations. There is now a binding decision on this issue and overtime should now be included in normal pay for holiday pay calculations.

However, it is worth noting that this only applies to the first four weeks of holiday stipulated by the Working Time Directive, the remaining 1.6 weeks that form the 5.6 weeks under UK law can be paid at basic pay.