In recent years there have been numerous high profile cases about what items of remuneration should be included in holiday pay calculations.
The latest of these cases is Flowers and others v East of England Ambulance Trust. In this case the Employment Appeal Tribunal (EAT) held that voluntary overtime should be taken into consideration when calculating certain elements of holiday pay.
By way of refresher, EU law grants all workers four weeks of holiday per year (EU holiday). UK law then grants an additional 1.6 weeks per year. The Flowers case, and the related cases preceding it, only concern how holiday pay for EU leave should be calculated.
Facts of the case
Mr Flowers and fellow claimants worked for the East of England Ambulance Trust (the Trust) and provided various ambulance services.
The Trust had two forms of overtime:
- Non-guaranteed overtime. This was contractual and applied where the claimants were attending a patient near the end of their shift they would be required to finish that work before they could ‘clock off’, causing them, on occasion, to work beyond their intended finish time. This was referred to as ‘shift overrun payments’.
- Voluntary overtime. This type of overtime was where the claimants volunteered for extra shifts.
Both types of overtime were not guaranteed.
Within the claimants’ contracts of employment, it was stated that:
“pay during annual leave will include regular paid supplements, including…payments for work outside normal hours…pay is calculated on the basis of what the individual would have received had he/she been at work. This would be based on the previous 3 months at work or any other reference period that may be locally agreed”.
The claimants brought an unlawful deduction from wages claim on the basis that their holiday pay should take into account both types of overtime.
In the first instance, the Employment Tribunal considered that the non-guaranteed overtime should be taken into consideration but found that the voluntary overtime did not need to be considered when calculating holiday pay.
The claimants appealed the Tribunal’s decision.
Appeal to the Employment Appeal Tribunal
The EAT concluded that there was no basis on which to distinguish the two types of overtime payments. Further, the clause in the claimants’ contracts of employment was to ensure that holiday pay was calculated on the basis of what the employee would have been paid had they not taken the holiday. If a claimant was regularly working one or both forms of overtime, then to not take this into account in their holiday pay would mean them receiving less than their normal remuneration on holiday, which could dissuade them from taking some or all of their holiday.
The claims have been remitted back to the Tribunal to be assessed on a case by case basis to consider whether each claimant provided a sufficient amount of regularity in voluntary overtime to justify this being taken into consideration for their holiday pay calculations.
The recent case law has a single trend; to ensure that workers are not dissuaded from taking holiday in fear that they will receive a less than their “normal remuneration”.
This case is another reminder that regularly worked voluntary overtime now falls within the concept of “normal remuneration” and must be taken into account when calculating holiday pay for EU holiday (the first four weeks of holiday per year).
We would advise that you review your contract and policies to see whether your organisation entitles workers to “normal remuneration” during periods of holiday. If it does, this may require your organisation to increase holiday pay for the full WTR allowance. Whilst this may be administratively simpler, it will be more expensive.
The Trust is appealing the decision to the Court of Appeal, so watch this space.