Hi Lisa,

I have exactly the same questions myself (especially as my Finance Director has just asked about it as well) and we have overtime on a monthly basis which is completely voluntary.

I would be interested to hear what others are doing/how they are approaching this.

I've also this month just been given the task of processing payroll which is a completely new world for me so keen to make sure that this is all done correctly.

Thanks,

Gemma

Hi Lisa

At this stage there is no cut and dried answer and it will take a series of legal decisions to establish clearer jurisprudence.

My own thoughts?

  Overtime worked every week - regular

  Overtime worked once or twice a month - not regular

  The middle ground - your guess is as good as mine

What do others think?

In reply to Ray:

This would be my inclination too, Ray. Where overtime is sporadic, voluntary, and takes no consistent form over a month or so, I would say this would not regular?

In reply to Ray:

Hi Ray,

Sounds like sensible logic to me.

Following that train of thought, I would suppose then, that when calculating holiday pay, one way of working out the overtime that should be added/included would be to average out the amount overtime a person usually does on a weekly basis?

Not sure what others may think about that approach?

I imagine that until any clear guidance is given, we will just have to muddle through.

In reply to Gemma:

@Gemma

I suspect that the "frequency" (not just duration) of overtime events will be a determining factor in whether it should be included. For instance, a person who works 30 minutes overtime on 4 occasions is more likely to qualify than a person who only works one extra stint of 2 hours.

PS Muddling through is what we do best, and keeps us in employment 

:-)

In reply to Ray:

Thank you so much for your views. I am glad to hear that it is not just me that is muddling through! I like your method of determining what is regular.

Do you think I should be considering backdating voluntary overtime payments i.e. for the last 3 months or going forwards we create a system for managing these scenarios?

In reply to Lisa:

Lisa - here's my suggestion.. I hope not too muddled
Unless you have large numbers of people affected and fear an "informed" backlash, I would be inclined to put it in place from your next pay period onwards - after all the payroll team also needs to put in place new processes/procedures and maybe reparameterise parts of the payroll system - that is unlikely to happen overnight.
Not 100% "clean", but pragmatic - after all, how many years do you want to go back to check records?

In reply to Ray:

Thanks Ray, we have been getting challenged somewhat from our Unions requesting a decision on this for sometime hence my question. I literally pulled together a communication earlier this week to put forward our stance that all overtime worked is purely voluntary and therefore employees have absolutely zero obligation to work overtime if asked however given the EAT outcome, do you think this would still be a satisfactory response however going forward, since more information has come to light, there will be a review of regular (as defined) voluntary overtime.

Sorry for my ramble, just want to be absolutely sure of next steps to take :-)

In reply to Lisa:

Welcome to the ramblers association.....
In the worst case scenario you could face demands for backdating this quite a long way. For me this is a management risk call to decide which "problem" you prefer to keep
- at one extreme you could say these new rules wil apply from date X (which could be 3 months ago, or a date in the very near future), and face challenges (one type of problem);
- at the other extreme you may prefer to evacuate all risks by going back much further in time (but leave a different type of problem with a major admin and payroll headache, plus more expensive)
This is where we ramblers and muddlers have to either make a judgement call or pass it up to our bosses if we really have doubts about the risks we are prepared to take.
The final choice has to be yours/your bosses in the light of your company's appetite for risk and its relatioships with its staff and their reps.
good luck :-)

In reply to Gemma:

It is acceptable to muddle through until there is a bit more clarity
On the other hand you can grasp the nettle and introduce average pay
We recommend that clients take a long view and pay on P60 or calendar=r year or holiday year averages so that both parties know what is coming.
My view is that I will know regular when I see it as will Employment Judges.

In reply to Lisa:

it is not really about voluntary but sufficient regularity so that people are not deterred from going on holiday

In reply to Ray:

Hi Ray

How does this work out if you offer more than the statutory minimum requirement. Would you have to pro-rate the over-entitlement, or only worry about adding extra entitlement when they went above the overentitlement?

Hope that makes some kind of sense!

In reply to Sam:

Hi Sam - good technical question!

My common sense approach would be to include it in the pay calculation. However......, that is not a "technical legal" answer

The last paragraph in this link indicates that it dosn't need to be included for holidays taken in excess of  the first 20 days (prorata for part-timers).

I can imagine the major headaches around trying to build and maintain this distinction in a payroll system......, plus explaining it to staff who want to understand what they've been paid and why!

Pragmatically I would keep it simple by including it the calculation.

Bumping an old thread because this issue has just come onto my radar in my new role (actually, it appeared on *my* radar shortly after I started, but I've managed to push it onto the radar of my employers now).

With a couple of payrolls under our belt since this finding came down, and time for the lawyers to cash in on advising clients on correct applications, has any more clarity managed to descend since August?

A couple of issues I'm aware of:

1. The application to only the first 20 days of holiday is based on European legislation, and the clever money seems to be thinking that, in the UK, it should apply to the full 5.6 weeks of statutory leave in the UK, as a minimum.

2. The definition of "regular" is going to have to be looked at on a case-by-case basis, as organizations with regular, but widely-spaced periods of overtime (such as in businesses with seasonal surges) may be said to have "regular" overtime expectations, and a 12-week period in May, for example, might look very different to one in December.

My immediate challenge is to explain the impact to my Board in terms of financial planning, because I'm not sure how to apply the maths to our existing workforce!

In reply to Robey:

Hi Robey

I agree with the clever money, particulary since 5.6 weeks is essentially the same as 20 workdays plus 8 bank holidays for a "normal" weekday worker.....

I suspect we will never see a black and white rule, so if a company has regular seasonal peaks, then that will be considered as sufficiently  regular to count for the holiday pay calculation. The real challenge will be defining a suitable retrospective reference period for calculating average pay, and, if a longer period (such as previous 12 months) is not used, then that will potentially produce strongly different rates of holiday pay for holidays taken at differnt at different times of the year. Which problem would you prefer

1. stong variations in holiday pay but using a shorter period (such as the 12 weeks you suggest)?
2. consistent levels of holiday pay, but with potentially strong variattions during the first year unetil people have built up a suitably long qualifying period?

I would go for b). because it's easier to explain - same rule all year round (except in year 1)

Watch this space?