UK: ECJ cases raise doubts over the inclusion of regular voluntary overtime in holiday pay calculations and over record-keeping requirements

Comments made in an ECJ judgment on a German working time case have raised doubts as to the correctness of the UK Employment Appeal Tribunal’s rulings that pay during the 4 weeks EU-derived statutory holiday must include an amount for voluntary overtime (if sufficiently regular and paid over a sufficient period). In Hein v Albert Holzkamm, the ECJ noted that remuneration for overtime of an “exceptional and unforeseeable nature” need not be included when calculating holiday pay, but that overtime pay should be included where a worker’s contract obliges them to work overtime “on a broadly regular and predictable basis and the corresponding pay constitutes a significant element of the total remuneration”. Domestic legislation does not need to be interpreted as giving the right that pay received for overtime work be taken into account unless these conditions are satisfied.

However, tribunals will continue to be bound by the EAT rulings pending this issue being revisited at appellate level. The Court of Appeal may have the opportunity to do so in the forthcoming appeal in the case of Flowers v East of England Ambulance Trust scheduled for May 2019.

A Court of Appeal ruling following the ECJ’s apparent approach on holiday pay would be welcome to employers. In contrast, an ECJ ruling following the recent Advocate-General opinion in CCOO v Deutsche Bank could prove a significant headache for employers. Advocate-General Pitruzzella has given the opinion that, under the EU Charter of Fundamental Rights and the EU Working Time Directive, employers are required to set up a system for recording the number of hours worked by individual workers each day in order to ensure compliance with Directive obligations, such as maximum working day and week, rest breaks, daily and weekly rest periods etc. UK regulations only require ‘adequate records’ to show whether the weekly working time limits (save for those who have opted out) and the night work limits are being complied with. An ECJ decision agreeing with the Advocate General would lead to the conclusion that the UK Regulations do not properly implement the Directive.

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