In 2018 the case of Flowers v East of England Ambulance Trust in the Employment Appeal Tribunal, established that non-guaranteed and voluntary overtime pay, paid over a sufficient period of time, should be included in calculating holiday pay under contractual terms and/or the Working Time Directive (WTD).
In May 2019 this was heard by the Court of Appeal and you can read the full report here. The Court of Appeal upheld the EAT’s decision.
The background
Employed by the East of England Ambulance Trust the employees in question held a range of roles, relating to the provision of ambulance services. They brought a claim in the Employment Tribunal for unlawful deduction of wages in relation to holiday pay. They argued that as their ‘non-guaranteed overtime’ was mandatory, all-be-it irregular, it should be taken into account when calculating holiday pay. They also considered that their ‘voluntary overtime’ should be taken into account.
They argued: (1) a right under the EU’s Working Time Directive (WTD) to be paid “normal remuneration” (as a public body the Trust could rely on the WTD rather than the UK’s Working Time Regulations) and (2) a contractual entitlement under their terms and conditions.
The Tribunal held that the employees’ contracts and the WTD entitled the employees to have their non-guaranteed overtime taken into account when calculating holiday pay, but not their voluntary overtime.
The employees appealed the decision and it was heard before the EAT. In this hearing the EAT considered the decision in Dudley Metropolitan Borough Council v Willetts. They ruled that payments for voluntary overtime should be taken into account because the work was carried out over a sufficient period of time, on a regular and/or recurring basis, so as to justify its description as “normal”.
The EAT also found that the employees’ contracts did include the right to holiday pay which took into account both types of overtime.
The Trust appealed to the Court of Appeal. The Court of Appeal found that the EAT ruling was correct and, furthermore, ruled that the decision in Dudley Metropolitan Borough Council v Willetts was correct.
What does this mean for employers?
The Court of Appeal decision confirms that where voluntary overtime is sufficiently ‘regular and settled’ for payments made in respect of it to amount to ‘normal remuneration’, it should be considered when calculating holiday pay.
In practice employers will need to tread carefully in setting out clear guidelines for the application of this within their organisation. For help doing this please contact Alison.