Case law: Court clarifies when voluntary overtime should be included when calculating holiday pay

Employers should take voluntary overtime into account when calculating holiday pay if it is paid 'over a sufficient period' – even if the overtime is irregular - a ruling has confirmed.

Members of an ambulance crew were expected, under their contracts of employment, to work 'non-guaranteed' overtime. Their contracts status that they could work 'voluntary' overtime if they chose to - though the employer was not obliged to offer it and the employee was not obliged to agree to. Both types of overtime were irregular, and different crew members worked different levels of each type.

The employees claimed that voluntary overtime should be taken into account when calculating their holiday pay, as it was part of their 'normal remuneration' because it was paid over a 'sufficient period of time'. Their employer disagreed.

The Employment Appeal Tribunal (EAT) found in favour of the employees. The law says that the underlying reason for the holiday pay rules is to ensure holiday pay should correspond to normal remuneration received while not on holiday, so there is no financial disadvantage to taking a holiday. So where patterns of work – albeit voluntary – prevail over a sufficient period of time, and on a 'regular and/or recurring basis', they can be 'normal', so that overtime pay normally received for that work should be included when calculating holiday pay.

Operative date

• Now

Recommendation

• Employers should take voluntary overtime into account when calculating holiday pay if it is sufficiently longstanding, and regular or frequent to qualify as normal remuneration

Case ref: Flowers v East of England Ambulance Trust UKEAT/0235/17/JOJ

Please note: An article published in the July 2017  edition of Legal Alert covered this case at an earlier stage in the legal process.