Employers must consider any voluntary overtime that is taken regularly in holiday pay calculations, alongside any “non-guaranteed” overtime, the Court of Appeal has ruled.
It agreed with the Employment Appeal Tribunal (EAT) that any overtime taken of an employee’s own volition should form part of holiday pay entitlements, so long as the overtime is taken in a regular pattern and payments amount to “normal remuneration”.
Annual leave
In 2017, in Flowers and others v East of England Ambulance Service NHS Trust, ambulance workers claimed that two types of overtime – “non-guaranteed” overtime taken when their shifts overrun and any voluntary shifts they choose to take in advance – should be included in holiday pay calculations.
The employment tribunal found that as they were required to work past the end of their shift if they were on an emergency call out, non-guaranteed overtime was considered part of their normal remuneration. However, as volunteering for additional shifts was not a contractual obligation, it considered that voluntary overtime should not factor into such calculations.
The ambulance staff took their claim to the EAT, which ruled that voluntary overtime should be taken into consideration in addition to non-guaranteed overtime. However, it referred individual claims back to the employment tribunal for a case-by-case assessment to determine whether the voluntary overtime was regular enough to be considered part of their normal remuneration.
The East of England Ambulance Service NHS Trust appealed to the Court of Appeal which, in a judgment issued today (10 June), agreed that additional, voluntary shifts should form part of holiday pay if they were regular enough.
Beverley Sunderland, managing director at Crossland Employment Solicitors, said the Court of Appeal judges were perplexed by the Hein v Albert Holzkamm GmbH judgment made by the European Court of Justice (CJEU) last December, which suggested that no overtime should be included in holiday pay calculations due to “its exceptional and unforeseeable nature”.
“This case is not authority for the proposition that all voluntary overtime must now be included in the calculation of holiday pay,” she said.
“They concluded that what the CJEU were actually saying (although did not want to refer the case to them to ask the question) was that there was a difference between voluntary overtime which was ‘sufficiently regular and settled’, which should be included and that which was ‘exceptional and unforeseeable’ which was not. This leaves open further challenges on the point, not least litigation on where the line is drawn before voluntary overtime should be included.”
Judge David Bean said in the judgment: “The CJEU case law establishes clearly that the question in each case is whether the pattern of work is sufficiently regular and settled for payments made in respect of it to amount to normal remuneration. There is no separate requirement that the hours of work are compulsory under the contract.”
