Council loses appeal over voluntarily-worked overtime and holiday pay

Dudley Metropolitan Borough Council has lost a case at the Employment Appeal Tribunal over how voluntarily-worked overtime is treated in the calculation of holiday pay.

It had appealed against an Employment Tribunal ruling that payment for voluntary overtime that is normally worked falls within the scope of Article 7 of the Working Time Directive and therefore is ‘normal remuneration’ for calculating Regulation 13 holiday pay.

In Dudley Metropolitan Borough Council v Willetts & Ors (Working Time Regulations) [2017] UKEAT 0334_16_3107  Simler J said: “It was open to the Employment Tribunal in this case to conclude that the payments in issue were part of normal remuneration for the claimants, and no error of law was made out.”

The case was brought on behalf of 56 employees in Dudley ’s place directorate responsible for repairs and improvements to council housing.

They argued that the exclusion of payments for voluntary overtime normally undertaken was inconsistent with the overriding principle of EU case law that normal remuneration must be maintained so that pay for annual leave corresponds to pay while working.

Dismissing Dudley’s appeal, the judge said that even though the original tribunal had admitted its ruling was “sailing into uncharted waters”, it had been entitled to reach the conclusions it did.

Steve Clark, Dudley’s cabinet member for finance and legal services, said: “The council is considering the contents of the Employment Appeal Tribunal judgment.

“After reviewing this, the authority will decide on the next steps in relation to this case. Unfortunately, until then, we cannot comment any further at this stage.”

Mark Smulian