Overtime, standby allowances and call-out payments count towards holiday pay if sufficiently regular

The Employment Appeal Tribunal (EAT) has further clarified the law on holiday pay and held that voluntary overtime pay, out-of-hours standby payments and call-out payments should be included in pay for the four weeks' leave under regulation 13 of the Working Time Regulations 1998. This was so even though there was no obligation for workers to accept the offer of overtime or to participate in the on-call rota. The EAT held that the overarching principle of the EU case law is that holiday pay must correspond to normal remuneration. Elements of pay that are sufficiently regular or recurring to qualify as "normal" must be included. Payments for voluntary work which is normally undertaken should not be excluded as a matter of principle.

The EAT also held that it would be wrong to focus on whether there is an "intrinsic link" between the payment and the performance of tasks required under the contract. Such a link is one way of establishing decisively that pay should be counted as "normal", but is not a necessary criterion. In any event such a link was present here because, once a worker commenced overtime or an on-call shift, they were performing tasks required under their contract. Absent the contract, no arrangement for overtime or on-call would have existed.

The EAT further held that mileage allowances ought to form part of holiday pay but only to the extent that they were treated as taxable benefits.

Dudley Metropolitan Borough Council v Willetts and others UKEAT/0334/16