Regular and settled voluntary overtime should form part of holiday pay
In the case of Flowers v East of England Ambulance Trust the Court of Appeal (“CA”) has held that voluntary overtime should be taken into account when calculating holiday. This is when it is sufficiently regular and settled for payments made in respect of it to amount to ‘normal remuneration’.
The claimants were employed in a range of roles concerned with the provision of ambulance services. In their roles they had access to non-guaranteed overtime and voluntary overtime. Non-guaranteed overtime occurred when they were carrying out tasks which had to be completed after the end of a shift e.g. when caring for patients to whom an ambulance had been sent. In these circumstances the obligation to complete a task continued beyond the end of a shift. The claimants were entitled to payment for the shift overrun. Voluntary overtime was something that was offered where the claimants were completely free to choose whether or not to accept it.
The claimants claimed that these two types of overtime should be taken into account when calculating their holiday pay and, as such, brought unlawful deduction of wages claims against East of England Ambulance Trust (the “Trust”).
In the first instance the tribunal found that the claimants’ contractual terms and conditions entitled them to have non-guaranteed overtime taken into account but not voluntary overtime. The claimants therefore appealed to the Employment Appeal Tribunal (“EAT”) on the voluntary overtime point. The EAT held that voluntary overtime should be taken into consideration in addition to non-guaranteed overtime.
The Trust therefore appealed to the CA.
The CA agreed with the EAT, that voluntary overtime should form part of holiday pay if the shifts are regular enough. A lot of time was spent considering the European Court of Justice’s judgment in Hein v Albert Holzkamm GmbH which suggested that overtime should not form part of ‘normal remuneration’ for the purposes of calculating holiday pay due to its ‘exceptional and unforeseeable nature’. However, the CA agreed with the submission made in Hein, that there was a clear distinction between exceptional and unforeseeable overtime payments on one hand and broadly regular and predictable ones on the other.
Points to note…
- It is important not to take this case as authority that all voluntary overtime should now be included in the calculation of holiday pay. The CA made it clear that the question is whether the pattern of work is sufficiently regular and settled for payments made in respect of it to amount to normal remuneration.
- Employers should therefore assess their workforce to see whether there are staff members who are regularly accepting offers of voluntary overtime. If they are, and there are regular and settled patterns, then such payments will need to be taken into account when calculating holiday pay.