Northern Ireland decision on calculating voluntary overtime – will England follow?

The courts in Northern Ireland have recently been hitting the headlines in England, providing food for thought for HR professionals and business owners here.

Hard on the heels of the decision of the County Court in Northern Ireland that a bakery’s refusal to bake a cake for a gay customer with the caption “Support Gay Marriage” amounted to direct discrimination (a decision which is going to be appealed), comes a decision that will send a shiver down the spines of employers. The Northern Irish Court of Appeal has ruled that an employer must take into account voluntary overtime when calculating holiday pay. Although decisions of the courts in Northern Ireland are not binding here, English courts and tribunals may be persuaded to follow.

Senior HR professionals and business owners who have staff working overtime will be familiar with the recent developments in the law regarding overtime and holidays. The decision in the Bear Scotland case, which everyone was talking about last winter, was that overtime which a worker is obliged to work if it is offered by an employer, should be included in calculating the amount of holiday pay that the worker should receive.

But what about overtime which is entirely voluntary i.e. there is no obligation on the employer to offer it and no obligation on the employee to work the overtime if it is offered? This is the question which the Court of Appeal in Northern Ireland has now considered. The case involved Mr Patterson who was employed by Castlereagh Borough Council. He regularly worked overtime on a voluntary non-compulsory basis, for which he was paid at the rate of time and a half. His holiday pay was calculated on his basic hours only. The court ruled that voluntary overtime can, as a matter of principle, be included in statutory holiday pay. However, whether it should actually be included depends on the facts of the particular case: whether or not voluntary overtime is normally carried out by the worker, and whether it is a sufficiently permanent feature of the worker’s remuneration. The court did not deal with these questions because there was insufficient evidence about Mr Patterson’s working patterns. The case has been referred back to the tribunal so that more detailed evidence of Mr Patterson’s circumstances can be considered.

Employers should nevertheless take note, analyse their arrangements for voluntary overtime and take advice on whether this should be taken into account in calculating statutory (as opposed to contractual) holiday pay, so that they are not faced with a claim by a worker following in Mr Patterson’s footsteps.