News - Voluntary Overtime and Paid Annual Leave

Employment & Discrimination - Michael Ford QC

There has been an important development in the law governing the calculation of the rate of pay in respect of paid annual leave due under regulation 13 of the Working Time Regulations 1998. In Patterson v Castlereagh Borough Council the Northern Ireland Court of Appeal has considered the applicability of the principles in Bear Scotland v Fulton, Hertel (UK) Ltd v Woods, Amec Group Ltd v Law [2015] ICR 221, [2015] IRLR 15 and British Airways v Williams [2012] ICR 847, ECJ to truly voluntary overtime.

Mr Patterson was the lead claimant in a multiple claim for unauthorised deductions from wages contrary to Article 45 of the Employment Rights (Northern Ireland) Order 1996 and a breach of the Working Time Regulations (Northern Ireland) 1998. Part of the claim challenged the fact that his holiday pay did not take into account voluntary overtime that he worked as an assistant plant engineer. The part of his claim relating to voluntary overtime was rejected by an Industrial Tribunal and he appealed on that point to the Northern Ireland Court of Appeal.

The debate regarding voluntary overtime

In order to explain the debate it is necessary to define some terms. In this context “truly voluntary” overtime is overtime which the employer is not contractually obliged to offer and which the worker is not contractually obliged to work if offered.

Bear Scotland was concerned with “non-guaranteed” overtime. While the employer was under no obligation to offer overtime, the employees were contractually obliged to work it if and when offered.

Ever since Langstaff J gave judgment in Bear Scotland some commentators have speculated that “truly voluntary” overtime should be treated in a very different manner, and should not be taken into account when calculating the appropriate rate of pay in respect of paid annual leave under regulation 13 of the Working Time Regulations 1998. The arguments have generally focussed on the words “required to carry out” in paragraph 45 of Langstaff J’s judgment in Bear Scotland and paragraph 32 of the CJEU’s judgment in Lock v British Gas Trading Ltd [2014] ICR 813. The suggestion has been that truly voluntary overtime is not something which the worker is “required” to carry out under his contract of employment, and should therefore be excluded from the calculations.

Michael Ford QC and I have long argued that the principles in Bear Scotland are clear and equally applicable to truly voluntary overtime, even if the issue did not strictly arise for consideration in the consolidated appeals. See for example this article, written shortly after Langstaff J handed down judgment in Bear Scotland. In summary, we argued that voluntary overtime was nonetheless something which the worker was required to carry out and therefore something which should count towards the calculation of pay due in respect of paid annual leave. On a simple offer and acceptance analysis, once “voluntary” overtime is offered and accepted an obligation to work it then arises, even if none existed before. No one would suggest that there is no contractual right to be paid for voluntary overtime, and equally it cannot sensibly be suggested that the worker remains free not to turn up or to leave the shift early if he or she had previously agreed to work it.

So far, the point has not reached the EAT for further consideration.

Developments in Northern Ireland

The NICA has now given judgment in Patterson v Castlereagh Borough Council. It was conceded by Mr Wolfe QC on behalf of the employer that, as a matter of principle, annual leave should reflect voluntary overtime provided that it was established that such overtime was “normal”. The NICA accepted that concession, which it felt to be “well made”. The case has been remitted to the employment tribunal for further findings of fact, including whether the overtime was “normal”.

 

While the concession meant that the NICA was deprived of full argument on the question whether Article 7 of the Working Time Directive required voluntary overtime to be taken into account, the Court briefly reviewed the authorities (Williams, Lock, and Bear Scotland) and the commentary in Harvey paragraph [871.07] before concluding,

 

“we are satisfied that in the light of these authorities Mr Wolfe correctly conceded that in principle there is no reason why voluntary overtime should not be included as part of a determination of entitlement to paid annual leave. It will be a question of fact for each Tribunal to determine whether or not that voluntary overtime was normally carried out by the worker and carried with it the appropriately permanent feature of the remuneration to trigger its inclusion in the calculation.”

 

This conclusion fits with the purpose of the Working Time Directive that workers should suffer no financial loss when taking paid annual leave, and also with the applicable ILO Convention (repeatedly referred to by the CJEU) which requires that workers should receive their normal or average remuneration.

 

Mark Whitcombe

26th June 2015

Michael Ford QC and Mark Whitcombe appeared for the employees in Hertel (UK) Ltd v Woods, Amec Group Ltd v Law which were heard at the same time as Bear Scotland. The cases are reported at [2015] ICR 221 and [2015] IRLR 15.

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