In the case of East of England Ambulance Service NHS Trust v Flowers & Ors, the Court of Appeal has ruled that voluntary overtime should be taken into account when calculating holiday pay if it is paid over a sufficient period of time.
Case background
Various members of the ambulance crews of East of England Ambulance Trust had clauses in their NHS terms and conditions of service relating to mandatory and non-guaranteed overtime, and voluntary overtime.
Non-guaranteed overtime is when a business is not legally obligated to provide overtime to its staff but, if and/or when it does, the employee is contractually obliged to work it. In relation to voluntary overtime, again, this is when the employer does not have to offer overtime to its staff but, if it does, the employee is under no obligation to accept the offer. Regarding this case, each staff member of the ambulance crew had varying levels of each type of overtime.
The ambulance crews made a holiday pay claim to the employment tribunal in 2017, arguing that their non-guaranteed and voluntary overtime should count towards their ‘normal’ remuneration and be included in their holiday pay. The claim was made under the NHS terms and conditions of service and Article 7 of the Working Time Directive, as interpreted by the European Court of Justice (ECJ).
Employment Tribunal
The Employment Tribunal ruled that non-guaranteed overtime should be taken into account when calculating holiday pay.
However, in relation to voluntary overtime, the Employment Tribunal deemed that this did not form part of the employees’ normal remuneration, as volunteering for overtime was not a contractual obligation.
Employment Appeal Tribunal (EAT)
Following an appeal lodged by the ambulance crew, the EAT held that voluntary overtime was part of normal remuneration if it was paid over a “sufficient period of time”. Thus, voluntary overtime, in addition to non-guaranteed overtime, should be taken into account when calculating holiday pay.
However, the EAT referred the claimants back to the Employment Tribunal for their cases to be heard and assessed individually. Its reasoning for this was to ascertain on an individual employee basis if the voluntary overtime was frequent enough to be considered to be part of their normal remuneration.
Court of Appeal
The ambulance crews appealed to the Court of Appeal, which agreed with the EAT ruling that voluntary overtime, if frequent enough, should form part of the claimants’ holiday pay.
Following the Court of Appeal ruling, Lord Justice Bean, commented in his judgment:
“The employment tribunal in the present case made no error of law in finding that the remuneration linked to overtime work that was performed on a voluntary basis could be included in normal remuneration for calculating holiday pay.”
Comment
This case highlights the importance of employers taking extra precautions when calculating holiday pay for their staff, and that in order to avoid any holiday pay claims, businesses should carefully monitor how and to whom it allocates its overtime to.
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