The Employment Appeals Tribunal Reserves Judgment on Non-Contractual Overtime and Holiday Pay

The Employment Appeals Tribunal (EAT) chose to reserve judgment in three important cases last week relating to holiday pay.

The central concern in these cases is whether calculation of holiday pay under the Working Time Regulations (WTR),is to include non-guaranteed/non contractual overtime. The rulings of theses cases could have significant implications for employers.

The claimants in Bear Scotland Ltd v Fulton and another, Hertel (UK) Ltd v Wood and others and Amec Group Ltd v Law and others, have argued that their employers were obliged to include regular, but non-contractual, overtime in their holiday pay. Their claims were upheld at the employment tribunals they attended.

However, in the appeals to these cases before the EAT, the employers have argued that the employment tribunal decisions are not in line with UK case law  which makes clear that payment for non-contractual overtime does not have to be included in holiday pay.

The Secretary of State for Business Innovation and Skills intervened in the case because of the potentially wide reaching implications economically and for compatibility of UK and EU.

The practical implications if the appeal is rejected and there are no subsequent successful appeals is twofold;

• employers will be obliged to include non-contractual overtime in holiday pay calculations;
• the Government will be required to amend the Working Time Regulations as it will be deemed not to have implemented the Working Time Directive effectively.

As can be seen from this potential outcome, the decisions in these cases are very important for business, employers and employees and the government.

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