Holiday pay can include overtime

Mr Neal’s terms and conditions of employment specified that he worked 35 hours a week made up of five, seven-hour shifts and was required to work overtime when necessary. However, his actual hours of work were governed by a weekly roster with shifts mainly of eight-and-a-half hours or nine hours, including working one Saturday in every three. Although the additional hours were said to be ‘voluntary’, in practice Mr Neal had never worked a seven-hour shift and had always worked according to the Freightliner roster.

The additional rostered hours and shift premia were not taken into account for the purpose of calculating holiday pay but Mr Neal argued at an employment tribunal that this was wrong and that his holiday pay should be based on the hours he was required to work. The employment tribunal, referring to a recent CJEU case, agreed with him on the basis that ‘additional’ hours can no longer be excluded if they are ‘intrinsically linked’ to the performance of the contract and awarded compensation for the underpayment to Mr Neal.

Although this is only an employment tribunal decision, which is not binding on future tribunals and could be appealed, it suggests that, where the reality of the job is that hours in addition to the basic contractual hours are ‘intrinsically linked’ to performing the job, pay for these hours should be included in calculating holiday pay.