NEWS & RESOURCES

Voluntary overtime and holiday pay calculations

Regular voluntary overtime should be included in holiday pay calculations.

In the case ‘East of England Ambulance Service NHS Trust v Flowers EWCA’, the Court of Appeal upheld the decision that for the purposes of calculating holiday pay, under the Working Time Directive (WTD), voluntary overtime pay should have been taken into account.

The Working Time Directive

The Working Time Directive 2003 (WTD) is EU legislation which requires member states to give full-time workers a minimum of 4 weeks paid annual leave. It is up to member states to create laws to determine how this should be implemented and how pay should be calculated. The laws which do this in Great Britain are the Working Time Regulations 1998 (WTR 1998).

The European Court of Justice (ECJ) have made it clear that the purpose of paid annual leave is to put the worker in a financial position which is ‘comparable to periods of work’. So, they should get their normal pay during this annual leave.

The Employment Rights Act

The Employment Rights Act 1998 does not specify what types of overtime there are, and therefore does not make clear which types should be considered as ‘normal’ working hours – which make is difficult to consider what ‘normal’ pay should be. However, it does say that normal hours should be either: a) the fixed number of hours worked, or b) (if higher) the minimum number of hours an employee is contracted to work. The latter should be taken to mean that at least guaranteed overtime should be included as part of someone’s normal working hours.

Employment Appeal Tribunal

In the Bear Scotland case, the Employment Appeal Tribunal (EAT) distinguished the following types of overtime:

  • ‘Guaranteed overtime’ which is work the employer is obliged by contract to offer as overtime, and therefore will be liable to pay for even if the employer has none available to offer at the time
  • ‘Non-guaranteed overtime’ which is work that the employer is not obliged to provide but which, if the employer offers it, the employee is contractually obliged to perform
  • ‘Voluntary overtime’ which is work the employer asks an employee to do but which the employee is free of any contractual obligation to perform (unless he agrees at the time to do so).

In this case, the employees did various jobs within the ambulance service and claimed that the calculation of their holiday pay should take into account any non-guaranteed overtime (such as when a shift has to overrun in order to finish taking someone to hospital), and the voluntary overtime that they often did.

The tribunal considered the Bear Scotland case, and ruled that the non-guaranteed overtime should be taken into account, but not the voluntary overtime.

This went to the EAT, who found that further to a case referred to as: ‘Willets’, and for the purposes of holiday pay under the WTD, normal remuneration should include any overtime which has been paid over a sufficient period of time on a regular and/or recurring basis – and that this is a question of fact. It also found that under the Agenda for Change NHS Terms and Conditions of Service, relevant NHS employees also have a contractual right to have their holiday pay calculated by reference to overtime – and this specifically includes voluntary overtime. They also considered the overarching purpose of paid annual leave as set out by the ECJ (see above). For all of these reasons it was found that voluntary overtime should also be included.

It then went to the Court of Appeal, whose ruling was published this month. They upheld the decision that voluntary overtime should have been included.

Further HR Guidance

The key learning points form this case are:  we know that voluntary overtime which extends over a sufficient period of time on a regular and/or recurring basis must be considered as ‘normal’ pay and must be included when calculating basic statutory holiday pay.

Employers will not be able to argue the fact that it is not contractually required as a defence. The only voluntary overtime that may not count toward normal pay, is any which is truly exceptional and unforeseeable (i.e. not the norm and not predictable). NHS employers bound by the NHS Terms and Conditions of Service (Agenda for Change) should note that their employees may also be able to bring a breach of contract claim if voluntary overtime is not included.

For practical HR support and advice call HR Solutions on 0844 324 5840 or contact us online to find out how we can help your business.

SHARE THIS:

Instagram

GET IN TOUCH

Got questions? Looking for advice?

GET IN TOUCH

Got questions? Looking for advice?

RELATED RESOURCES

Explore our comprehensive library of related resources to gain valuable insights, expert tips, and helpful tools for optimising your HR practices.

Request a Call from an HR Advisor

Our expert HR Advisors are here to assist you. To schedule a complimentary 30-minute call, please complete the form below. One of our advisors will reach out within 24 hours to either conduct the consultation or arrange a suitable time.

SIGN-UP FOR UPDATES

Receive all the latest industry insights, expert tips and exciting updates from HR Solutions, straight to your inbox.

Strategic HR thinking whitepaper

Our latest HR whitepaper offers an in-depth analysis and strategic framework aimed at transforming Human Resources into a pivotal element of business success in the rapidly evolving corporate environment of 2024.

PARTNER REGISTRATION

Register your details below and we will contact you regarding how HR Solutions can support your organisation.

MAKE A GENERAL ENQUIRY

We’re here to assist you with any questions or enquiries you might have. Simply fill out the form below, and our dedicated team will get back to you.

var iframe = document.getElementById('pageurl-general-popup-6'); iframe.src = iframe.src + "?Form_Completion_Page=" + window.location.pathname + "&" + window.location.search.substr(1);

REQUEST A PROPOSAL FROM US

We’re here to assist you with any questions or enquiries you might have. Simply fill out the form below, and our dedicated team will get back to you.

BOOK YOUR PLACE

Please complete the form and one of our team will call you back to discuss your query/booking.

Request your free trial

Register your details below and we will contact you about your 30 day free trial of the HR Knowledge Base.

REGISTRATION FORM

Register your details below and we will contact you about access to the HR Knowledge Base.  As part of your approved industry membership organisation you can get access to the HR Knowledge Base, created by Business HR Solutions, which is the go-to resource for thousands of business owners and managers across the UK.

2023/2024 SME BUSINESS SURVEY

Our latest 2023/24 SME Business Survey sheds light on the intricate dynamics shaping the SME sector and unveils critical insights that can guide businesses toward sustainable success.

IF YOU WISH TO PURCHASE HR ADVICE LINE TIME, PLEASE COMPLETE THE FORM BELOW.

HR Solutions are here to help. We offer a standard hourly rate package for ad hoc HR advice which means you can pay for what you need, whenever you need it, and then quickly get advice. Our highly experienced advisors are on hand to provide you with practical employment advice to help you manage your workforce.  You can purchase HR Advice Line time now, and the time purchased will be valid for 12 months.