Like many other employers, Dudley MBC had been paying it's Quick Response Operatives holiday pay at their basic pay rate only.

Mr Willetts and his colleagues claimed that their holiday pay should include other payments including:

  • Call out allowance
  • Stand-by pay for out of hours work
  • Travel / mileage allowance
  • Voluntary overtime pay

The contracts of employment didn’t require the employees to work overtime and they would opt in and out of whether or not they did so.

Dudley MBC argued that previous leading cases didn’t require these sorts of pay components to be included in holiday pay calculations on the basis that they weren’t “intrinsically linked” to the type of work employees were obliged to perform under their contracts of employment.

However the Employment Appeal Tribunal disagreed and made clear that holiday pay must “correspond to the normal remuneration received by the worker” so that they don’t suffer a deterrent or disadvantage to taking holiday.

This decision will be hailed as a major victory for workers. On the other hand, employers will only need to take these types of payments into account if they are paid with sufficient regularity so as to be considered pay of “normal remuneration”. One off, or infrequent payments will not need to be included.

We have a wealth of experience in restructuring pay systems, and handling holiday pay claims.

For more information about:

  • What to include when calculating holiday pay
  • How to update the holiday pay clauses in employment contracts
  • How to correct historical underpayment

Please contact any member of our experienced team of Employment Lawyers.

If you would like to discuss any issues raised in this article, we have specific employment law expertise in advising in this area. Please contact Joan Pettingill or a member of the Employment Team.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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