Dudley Metropolitan Borough Council v Willetts & Ors

For the four weeks’ leave protected by Article 7, holiday pay must correspond to the worker’s normal remuneration. The decisive question is whether a payment has become normal in fact, not whether the work attracting it was compulsory under the contract.

Voluntary overtime, standby and callout payments may therefore be included where they have been paid over a sufficient period on a regular or recurring basis. An intrinsic link to contractual tasks is a decisive basis for inclusion, but it is not the sole test. A tribunal must assess normality as a question of fact and degree. A reduction in normal remuneration presumptively deters leave-taking; the worker need not prove that leave was actually forgone.

The respondents were council employees who performed voluntary overtime, out-of-hours standby and callout duties in addition to their contractual hours. They could join or leave the relevant rotas freely. The Employment Tribunal held that regular payments for those duties, and the taxable element of the associated mileage allowance, could form part of normal remuneration for holiday pay under Regulation 13 of the Working Time Regulations 1998.

The Council appealed. It argued that entirely voluntary work lacked the intrinsic contractual link required by the decisions in Williams and Lock, and that payments received only during periodic out-of-hours duties were regular but not normal. The central issue was whether voluntary overtime and related payments, when normally received, fall within Article 7 holiday pay.

1. Appeal dismissed. The Employment Tribunal made no error of law in holding that remuneration for voluntary overtime, standby and callout work could be included in normal remuneration for Regulation 13 holiday pay.

2. Article 7 requires holiday remuneration to correspond to the normal remuneration received while working. Its purpose is to prevent a financial disadvantage liable to deter a worker from taking annual leave. The relevant concept is normal remuneration, rather than contractual remuneration or a normal working week.

3. Williams did not establish an exclusive test requiring every included payment to be intrinsically linked to tasks which the worker was contractually obliged to perform. Such a link is decisive where it exists, but the absence of it does not automatically exclude a payment. Payments related to seniority, length of service and qualifications illustrate that normal remuneration is not confined in that way.

4. Voluntary work which is undertaken regularly or recurrently for a sufficient period may generate normal remuneration. The fact-finding tribunal must decide that issue as one of fact and degree. Payments need not arise every week: regular payment for one week each month, or one week in every five, may be normal if it is neither exceptional nor unusual. A representative average can accommodate fluctuations.

5. It was relevant that the callout work resembled the employees’ ordinary work. However, Article 7 does not turn on a distinction between work undertaken under a contractual obligation and work undertaken after volunteering. Once the relevant payments are normally received, they must be reflected in holiday pay to avoid financial disadvantage.

6. A deterrent effect follows from reducing normal remuneration. It does not depend on proof that a worker actually declined leave, or could not have arranged leave in a week without overtime. Individual loss remained for a future hearing, requiring assessment of each worker’s usual pattern and likely earnings absent leave.

• Employment Appeal Tribunal: appeal dismissed. The Tribunal upheld the Employment Tribunal’s conclusion that regularly received voluntary overtime and related payments could constitute normal remuneration for Regulation 13 leave.
• Employment Tribunal: held that the disputed voluntary overtime, standby, callout and relevant taxable mileage payments could, on the facts, form part of normal remuneration for holiday pay under the Working Time Regulations 1998.