Holiday pay and employee monitoring

Two recent employment cases have provided important follow-up on two key issues: monitoring and holiday pay, writes Sarah Maddock.

The latest holiday pay case has confirmed the direction of travel on this issue; whereas a new European case on employee monitoring has reversed the previous position. As ever, those working with employment law are being kept on their toes.  

Holiday pay and voluntary overtime

Since the publication of the well-known 2014 case, Bear Scotland v Fulton Limited, the question of the correct calculation of holiday pay has been a hot topic if you engage workers who are paid overtime or other payments over basic pay.

Although the Bear Scotland case settled this issue on the specific topic of non-guaranteed compulsory overtime payments, several questions remained unanswered. One of those key questions was whether the reasoning in Bear Scotland applied to employees who voluntarily worked overtime, not just those who were required to work overtime when requested (as in Bear Scotland). 

This outstanding issue has now been resolved by the Employment Appeal Tribunal (EAT), in a case called Dudley MBC v Willetts.  In this case, the claimants in question were employed under contracts with set contractual hours, but they also volunteered to perform additional duties, which were not contractually required. They also participated in on-call rotas for which they were paid a standby allowance, plus call-out payments if they were called upon to do work while on call. The claimants' work was organised on a very flexible model: employees could drop on and off rotas to suit them. The employer had no right to require the employees to undertake the additional work. However, when the claimants took holiday, their pay was based only on their basic wages and they did not receive any payments to reflect their voluntary overtime, or other payments, including:

• out-of-hours standby pay
• call-out payments
• mileage allowances for work-related travel.

Relying on earlier caselaw, including the Bear Scotland decision, the employees contended that their holiday pay should have included the additional payments set out above, including sums to reflect their voluntary overtime.

The EAT agreed with the employees and said that their holiday pay should include voluntary overtime which is normally worked.  It also went on to say that holiday pay should include the additional payments set out above, including payments for mileage allowance which were in excess of the HMRC approved rate (as the excess would count as 'pay').

This decision is very much in line with the direction of travel on holiday pay, i.e. that whilst taking holiday, employees should (as far as possible) be in the same position financially that they would have been in if they had been working. In accordance with the health and safety objectives of the Working Time Directive (from which our Working Time Regulations are derived), employees should not be deterred from benefiting from a break from work because it may mean a reduction in their take-home pay.

So, clarity has finally been provided on voluntary overtime and holiday, but there are some important points to note.

• This case (and the other recent holiday pay cases) are based on law which derives from the European Working Time Directive. Although this Directive is transposed into UK law through the Working Time Regulations and will, therefore, be retained post-Brexit, it is possible that after that point, the government may legislate to change the position.
• Voluntary overtime will only be payable during leave if it is 'normally' worked. The EAT did not provide any definitive guidance on what this means. It will be a question of fact and degree for individual tribunals (and, by extension, employers) to decide. In the Dudley case, payments made one week in five counted as 'normal pay'.
• The decision in Dudley (and the other holiday pay cases) applies only to the 4 weeks' annual leave to which employees are entitled under the Working Time Directive; it does not apply to:

- the additional 1.6 weeks' leave to which employees are entitled to under domestic legislation, or

- to any other additional leave under the contract.

Employee monitoring

As we reported last year, the European Court of Human Rights (ECHR) provided a headline-grabbing ruling when it said that an employer was entitled to read personal messages sent by an employee using a work-related 'instant messenger' service provided by the employer – notwithstanding that the messages concerned the employee's health and intimate private life. 

The ECHR originally said in Barbulescu v Romania (2016) that because the messages had been sent during working hours and in breach of the employer's explicit policy, the employer was entitled to monitor the messages without breaching the employee's right to privacy under the European Convention on Human Rights. Although this was widely misreported in the press as meaning that employers had an unfettered right to 'snoop' on their employees, the decision did confirm that employers had considerable scope to monitor private communications by employees, within specific confines.

The case was appealed to the Grand Chamber of the European Court of Human Rights, which has now performed a volte face on the original decision, and ruled in favour of the employee's right to privacy. The full appeal decision can be found here.  In summary, the Grand Chamber held that, although the employer had a policy which clearly stated that employees' use of electronic communications would be monitored, it did not expressly state that the content of messages would be monitored. This meant that the employee had a reasonable expectation that his messages would remain private. The Grand Chamber noted that an employer cannot totally eliminate private social life in the workplace, through its use of policies. Respect for private life and for the privacy of correspondence continues to exist, even if these may be restricted as far as is necessary.

Sarah Maddock is an Associate at Bevan Brittan. She can be contacted on 0370 194 1317 orThis email address is being protected from spambots. You need JavaScript enabled to view it..