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Voluntary overtime should be included in the calculation of holiday pay

20 August 2018

The Employment Appeal Tribunal (‘the EAT’) has recently held in the case of Flowers & Others v East of England Ambulance Trust (‘the Trust’) that voluntary overtime should be included in the calculation of holiday pay in accordance with the Working Time Directive.

In this case, the claimants were employed by the Trust and were allowed to undertake overtime which fell into two categories. These were, ‘non-guaranteed overtime’ and ‘voluntary overtime’. The ‘non-guaranteed overtime’ was also known as ‘shift overrun payments’. Shift overrun payments would occur where an employee was coming to the end of their shift but were in the middle of undertaking a task which needed to be completed before they were allowed to go home, meaning their shifts would overrun. It was a contractual obligation for employees to carry on working in these situations and they were entitled to payment for this overtime. In respect of voluntary overtime, it was not a contractual obligation for employees to undertake and employees were free to choose whether or not to work any of these shifts.

The claimants argued with the Trust that their holiday pay should take account of both types of overtime. The Trust disagreed with this and stated that they would only consider the ‘non- guaranteed’ overtime when calculating holiday pay.

The claimants brought a claim in the Employment Tribunal (‘the ET’) in relation to the calculation of their holiday pay pleading that both types of overtime should be included. The ET agreed that the contractual non-guaranteed overtime should be included but dismissed the claims in respect of voluntary overtime.

The claimants appealed the ET’s decision that voluntary overtime should not be taken into account.

Prior to the appeal being heard, however, the Employment Appeal Tribunal (‘the EAT’) gave judgement in the case of Dudley Metropolitan Borough Council v Willetts. In Dudley, it was confirmed that payments relating to voluntary overtime should be included in the calculation of holiday pay if they were frequent enough to constitute "normal pay".

The EAT in the Flowers case followed the decision given in Dudley and stated that the ET had been incorrect to state that voluntary overtime fell outside the calculation of holiday pay under the Working Time Directive. The Honourable Mr Justice Soole concluded that "the claims must be remitted for a case-by case assessment" to determine whether the voluntary overtime had been paid over a "sufficient period of time" to be considered as regularly paid supplements to count towards holiday pay.

Comment

This is another interesting decision concerning the calculation of holiday pay and shows how Tribunals will need to assess matters on a case by case basis. Employers should be careful in implementing a blanket rule on the inclusion (or exclusion) of voluntary overtime in holiday pay calculations. When calculating an employee’s entitlement to holiday pay, employers must turn their mind to whether overtime of any description forms part of an employee’s ‘normal pay’ to avoid these types of claim.

By Emily Jones

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