Is the calculation of redundancy pay based on the employee's "normal working hours" or "regular working hours"?

The Employment Rights Act 1996 (ERA) uses the term "normal working hours" in the context of a number of different employment rights, including guarantee payments, time off to look for work or arrange training in the event of redundancy, time off for ante-natal care, time off for employee representatives, time off for young person for study or training, payments during the period of notice, and the calculation of a "week's pay" in the context of most statutory rights.

The London Employment Appeal Tribunal (EAT), (3 November 2004) in the case Refrigeration Norwest (Chester) Ltd v R M Unwin, has applied the strict meaning of the term "normal working hours" in the context of Mrs. Unwin's claim that she was underpaid redundancy pay.

Mrs. Unwin's written statement of employment particulars of employment gave her normal working hours as 20 and stated that overtime was voluntary. However, in seven years working for the employer, there were only 15 weeks in which she worked less than 35 hours.

It was the use of the term "normal working hours" for the calculation of a "week's pay" that was relevant to Mrs. Unwin's entitlement to redundancy pay. As set out in section 221 of ERA:

"if the employee's remuneration for employment in normal working hours (whether by the hour or week or other period) does not vary with the amount of work done in the period, the amount of a week's pay is the amount which is payable by the employer under the contract of employment in force on the calculation date if the employee works throughout his normal working hours in a week."

The Court of Appeal, in the 1973 case Tarmac Roadstone Ltd v Peacock, held that "normal working hours" means hours which are fixed and obligatory on both sides. As the extra 15 hours that Mrs. Unwin worked regularly were not guaranteed, the hours on which her redundancy pay was based are her normal working hours of 20, not on her regular working hours of 35.

The only circumstances where overtime is included in "normal working hours" is where overtime is a contractual requirement, i.e. the employer is obliged under the contract to provide it, and the employee is required under the contract to work it.

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Source:
www.employmentappeals.gov.uk/uploads/UKEAT0394043112004/index.htm