Regular voluntary overtime must be included in holiday pay

Posted on by

In East of England Ambulance Service NHS Trust v Flowers 2019, Mr Flowers and his colleagues regularly did compulsory, non-guaranteed and voluntary overtime. Non-guaranteed overtime occurred when shifts ran over and he was able to volunteer for extra shifts to cover staff shortages. However, none of this overtime was included in any calculations for holiday pay.

He put in a claim for unlawful deductions from his holiday pay under not only the Working Time Directive but also the NHS Terms and Conditions of Service relating to holiday pay.

The Employment Tribunal found in his favour in relation to the compulsory and non-guaranteed overtime being included in his holiday pay but rejected his claim that overtime should be included. The Employment Appeal Tribunal overturned this decision. The NHS Trust appealed to the Court of Appeal who confirmed that holiday pay under the Working Time Directive must include voluntary overtime that is sufficiently regular and settled.

So the issue here is what constitutes “sufficiently regular and settled” in relation to voluntary overtime. It will be very obvious in some cases that voluntary overtime is regular and settled and so must be included in the holiday pay calculation but in other cases will not be so clear and therefore ultimately could be down to an employment tribunal to decide based on the specific facts of a particular case.

To make things simple, and from a practical point of view, it might simply be worth including all voluntary overtime payments in holiday pay calculations unless you are able to demonstrate that all voluntary overtime is exceptional or very unusual.

This Court of Appeal judgement only relates to the four weeks’ annual leave in the Working Time Directive and not the additional 1.6 weeks that usually relate to bank holidays. But it could be complicated to differentiate between the two and so you may decide to include all voluntary overtime in all holiday payments. However, if you decide to differentiate, we recommend that you make it quite clear within your employee contracts and holiday policies that the first 20 days of any holiday taken (including bank holidays) during a holiday year will include payments for voluntary overtime and the remaining 8 days will not.

Don’t forget whilst on this subject that the reference period for calculating holiday pay is increasing from 12 weeks to 52 weeks from 6th April, 2020.

< Go back

Free HR Advice

HR Articles HR Healthcheck Contact Us
Receive our HR eBulletin
Enter details here to get yours