KNOWLEDGE

Holiday pay should include voluntary overtime

MortonFraser_David Walker
Author
David Walker
Partner
PUBLISHED:
05 August 2019
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The case of East of England Ambulance Service NHS Trust v Flowers and others re-emphasises the need to focus on an employee's regular pay when calculating holiday pay. 

Mr Flowers and his colleagues were employed in a range of roles concerned with the provision of ambulance services.  They brought a claim alleging unlawful deduction from their holiday pay, arguing that holiday pay should take account of overtime in two categories - non guaranteed overtime, which occurs where an employee is carrying out a task that must be completed after the end of a shift, and voluntary overtime.  The claim was based both on a contractual right based on clause 13.9 of the Agenda for Change NHS terms which state that holiday pay will include "regularly paid supplements" and "payments for work outside normal hours" and, in the alternative, under Article 7 of the Working Time Directive ("WTD"). 

The employment tribunal decided the claimants were not entitled to have voluntary overtime included in the calculation of their holiday pay.  However, the EAT then handed down their judgement in Dudley Metropolitan Borough Council v Mr G Willetts and others (the "Willetts case") and on the back of that decision the claimants appealed to the EAT.   

In respect of the contractual claim, the EAT decided that voluntary overtime should be included in the calculation of holiday pay.  The EAT also found that the WTD required voluntary overtime payments to be included in the calculation of holiday, following the EAT judgement in the Willetts case. 

Before the Court of Appeal, the Trust argued that overtime payments should only be included where there was a contractual requirement to perform overtime and it was broadly regular and predictable.  However,  the Court rejected this argument finding that it would contradict the European Court of Justice's finding in Williams and others v British Airways plc that "workers must receive their normal remuneration" during their holidays. It held that there was no requirement for the overtime to be contractual, and that while the overtime did need to be broadly regular and predictable it was wrong to suggest that voluntary overtime was always exceptional and unforeseeable.  The appeal therefore failed.   

The Court were also clear that clause 13.9 of the Agenda for Change terms meant that Mr Flowers and his colleagues had a contractual entitlement to have voluntary overtime taken into account for the purposes of calculating holiday pay so the Trust's appeal on that point also failed.  

This means there is now both EAT and Court of Appeal authority that voluntary overtime should be included in the calculation of holiday pay, when it is paid regularly enough to qualify as "normal pay". The Willetts case found that payment every four or five weeks was enough to meet the threshold, if it was paid over a sufficient period of time but each case will turn on its own facts. There also still remains the possibility of a further appeal to the Supreme Court.

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