Holiday Pay Decision

The law in relation to holiday pay, and in particular what should be included in holiday pay, has evolved in recent years in light of cases such as Williams –v- British Airways plc and Bear Scotland Ltd –v- Fulton.  A recent decision of an Employment Tribunal, whilst only a first instance decision, adds further guidance to employers assessing what must be taken into account when determining the amount of holiday pay due to staff.

In Brettle –v- Dudley Metropolitan Borough Council a group of 56 claimants brought claims for unlawful deductions from wages in respect of under paid holiday pay.  The claimants argued that voluntary overtime, voluntary standby allowance and voluntary call-out payments should have been factored into holiday pay calculations.

The Tribunal determined that the payments could not, on the analysis of the employment contracts, amount to “normal pay”.  However, the Tribunal relied upon Bear Scotland to find that what is normally received constitutes “normal pay” and the regularity and consistency of the payments led the Tribunal to conclude that they were intrinsically linked to the employment.  Accordingly, the payments were to be included in calculation of holiday pay.

The decision is a reminder to employers that holiday pay should, in effect, “match” what the normal pay is.  This decision and those following Bear Scotland and Williams indicate that the Employment Tribunal is clearly going to look beyond any labels such as “voluntary” and assess what constitutes “normal pay” in the context of the work being undertaken.