Right to holiday pay includes overtime

Friday 27th September 2013

Holiday Pay A recent decision at tribunal could rock the boat for employers with shift workers and employees in similar irregular work patterns. In the Neal v Freightliner Ltd an employment tribunal has held that a freight worker was entitled to have overtime payments and shift premia counted towards his holiday pay. This is because the payments were intrinsically linked to the performance of the tasks he was required to carry out under his contract of employment.

Consequently, it has been determined that they should be taken into account when calculating his remuneration during annual leave, following the judgment of the European Court of Justice in British Airways plc v Williams and ors 2012 ICR 847, ECJ (Brief 935). The tribunal achieved this effect by construing the Working Time Regulations 1998 SI 1998/1833 so as to disapply Ss.223(3) and 234 of the Employment Rights Act 1996 when calculating holiday pay.

Neal's terms and conditions of employment specified that he worked a basic 35 hours per week made up of seven-hour shifts. He was also required to work overtime whenever necessary. His hours varied day by day in accordance with a weekly roster providing 24-hour cover Monday to Friday and Saturdays until 2pm. His contract also stipulated that he had to work one Saturday in every three. Any hours in addition to these were said to be voluntary. In practice, Neal had never worked a seven-hour shift but worked shifts of largely eight-and-a-half or nine hours, with occasional 12-hour shifts.

But the additional rostered hours were not taken into account for the purpose of calculating holiday pay. Neal argued that this was wrong and his holiday pay should be calculated in accordance with his rostered hours since these were the hours he was required to work. He therefore lodged proceedings in the employment tribunal claiming that he had suffered a series of unauthorised deductions from wages in relation to underpayment of holiday pay. He also claimed that the underpayment was a breach of the Working Time Regulations 1998.

Referencing past cases, his took his case to tribunal. The employment tribunal concluded that it was quite clear from the ECJ's judgment in the Williams case that Neal was entitled to holiday pay that was not based solely on his basic salary. He was entitled to have other components taken into account provided that they were intrinsically linked to the performance of the tasks he was required to carry out under his contract of employment. The work he did as overtime and on weekends all amounted to the performance of tasks that he was required to carry out under his contract of employment.

This case summary will be replaced with a full report in due course.

Author: Administrator

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