A "landmark" legal victory means employers will have to include voluntary overtime when calculating holiday pay, according to the Unite union.
An employment appeal tribunal decision in the case of council workers at the Metropolitan Borough of Dudley in the West Midlands is the first to confirm that payments for voluntary duties, such as overtime, standby, call-out work and travel-time to work, should be included in the calculation of holiday pay, said Unite.
The ruling is of "major significance" to workers across the country, many of whom receive payments for voluntary duties, but do not receive those payments when they take holiday, said the union, adding it sets a legal binding precedent which employment tribunals across the UK are obliged to follow.
The case against Dudley council involved 56 Unite members employed as tradesmen including plumbers, electricians and carpenters working on maintaining the council's housing stock.
Unite's assistant general secretary for legal services, Howard Beckett, said: "Today's landmark victory further clarifies the law on holiday pay and is of major significance to workers across the UK.
"It means employers must now include all earnings, including payments for voluntary duties and overtime, in calculating holiday pay.
"The ruling means unscrupulous employers no longer have carte blanche to fix artificially low levels of 'basic' hours and then contend the rest of time was 'voluntary' overtime that did not have to be paid in respect of annual leave.
"Unite will be liaising with Dudley council and its legal team over reaching a satisfactory settlement for our members.
"In the meantime we would urge other employers who have been fleecing workers of their holiday pay to get their house in order or face legal action."