in-Cumbria’s legal experts Baines Wilson LLP take a look at the latest developments in holiday pay disputes. (Sponsored Content)

The last few years have seen a big increase in case law around holiday pay and, in particular, what payments should be included in the calculation of a worker’s holiday pay.

A recent employment tribunal considered whether voluntary overtime should be included in the calculation of holiday pay.

Brettle v Dudley Metropolitan Borough Council

This case was brought in respect of 56 employees all employed by the Council in its home repair and improvement department. Most of the employees had similar roles, allowances and working patterns.

The employees were paid their basic pay when they took annual leave but claimed that certain payments normally received by them should have been included when calculating the amount of their holiday pay. Specifically, the payments related to voluntary out of hours standby, voluntary call out allowances, travel allowance and additional voluntary overtime.


Out of hours standby payments

The relevant Claimants could voluntarily opt to join the rota to be on standby and even when on the rota it was entirely voluntary as to whether they did it. Notwithstanding the voluntary nature of the arrangements, the Employment Tribunal found that they were paid with sufficient regularity so that such payments were part of their normal pay and should be included in the calculation of their holiday pay. If they didn’t receive an amount in respect of these payments when on holiday it could deter them from taking leave, which is contrary to the Working Time Directive.

Call out allowances

The employees again participated in a voluntary rota but once an employee was on the voluntary rota, they had to attend any call outs arising at their allotted time. The Employment Tribunal found that the Council allowed employees to volunteer which was an opportunity not available to every employee, so the payment for call outs arose from their normal employment and the pay received was therefore normal pay. Consequently, these payments should be included in the calculation of holiday pay.

Travel allowance

The employees were paid an enhanced amount of 55p per mile for any travel they undertook. The Employment Tribunal found that any part of such payment which was subject to tax as a benefit in kind formed part of an employee’s normal pay. It therefore needed to be included in the calculation of holiday pay.

Voluntary overtime

The Employment Tribunal drew on previous decisions in relation to overtime and found that to be capable of inclusion in the calculation of holiday pay, voluntary overtime needed to be performed with a degree of regularity.

Finally, the Employment Tribunal gave its view that in the absence of an agreement to the contrary, employers and tribunals can treat European holiday (4 weeks) as being taken before UK holiday (1.6 weeks) in any leave year. A failure to include these additional payments in holiday pay will only amount to an unlawful deduction from pay in relation to European holiday, with employees only having 3 months to initiate a claim by contacting ACAS.


Whilst this is only an Employment Tribunal decision and therefore not binding on any other Employment Tribunals it will be persuasive and demonstrates the direction of travel in relation to holiday pay.

The headlines will focus on voluntary overtime having to be included in the calculation of holiday pay; however, the judgment makes it clear that voluntary overtime will need to have been worked with a sufficient degree of regularity for the overtime payments to become part of ‘normal pay’. It is unlikely that genuinely ad hoc overtime which is not worked frequently should be included in the calculation of holiday pay.

If you have any queries regarding holiday pay or any other HR queries then please contact Joanne Holborn, Tom Scaife or Caroline Rayner on 01228 552600 or 01524 548494.