The Court of Appeal has confirmed that, for the purposes of calculating holiday pay for the 4 week EU-derived entitlement under the Working Time Regulations, voluntary overtime should be included as part of “normal remuneration”, provided it is sufficiently regular and predictable. This was notwithstanding somewhat Delphic comments from the European Court of Justice in Hein v Albert Holzkamm suggesting that, as overtime was always “exceptional and unforeseeable”, only pay for regular mandatory overtime would form part of “normal remuneration” – a contention which the Court described as clearly “nonsense”. (Flowers v East of England Ambulance Trust)
Meanwhile, a Northern Irish Court of Appeal ruling has raised the possibility of higher historic holiday pay claims, given its decision that working time regulations should be read as permitting a claim for a series of deductions and that a series will not be broken by gaps of more than 3 months between underpayments.
The Court ruled that deductions will be a factually linked series where they all relate to holiday pay wrongly calculated using basic pay rather than “normal remuneration”. It considered that the EAT ruling in Bear Scotland v Fulton, that a gap of more than 3 months between deductions broke the series, was wrongly decided. Further, lawful payments of correct amounts between the underpayments will not break the series.
As police officers, the claimants were not eligible to bring an unlawful deduction claim (which expressly permits claims brought within 3 months of the end of a series of deductions) but instead had to frame their claim under the Northern Irish working time regulations (which impose a time limit on claims of 3 months from each deduction). The Court therefore read words into the working time regulations to permit claims made within 3 months of the last of a series of deductions, given that the EU principle of equivalence requires national remedies for breaches of EU rights to be no less favourable than for similar domestic rights.
The ruling is not binding in Great Britain, but may be persuasive. The employer has announced it will seek leave to appeal and of course a Supreme Court ruling would be binding in Britain. Employers who have not yet moved to a ‘normal remuneration’ calculation for holiday should keep a close eye on developments. (Chief Constable of the Police Service of Northern Ireland v Agnew)
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