Holiday Pay and Overtime – what employers need to note

Posted on June 12, 2019

Extra hours worked over and above normal shifts on a regular basis could be now calculated as part of holiday pay – court rules

The case of when to add extra hours worked to holiday pay formed part of a legal ruling recently. The Court of Appeal has found in favour of ambulance crews whose contracts cited a variety of overtime arrangements which were not taken into account when calculating holiday pay.

When a crew are out on a job near the end of their shift and then see the job through and obviously work extra hours – this is classed as non guaranteed overtime and considered to be part of normal remuneration. Volunteering for extra shifts was classed separately but after this weeks judgement (Flowers and others v East of England Ambulance Service NHS Trust) it was agreed that additional voluntary shifts could form part of holiday pay if regular enough.

This case could set a precedent for other public and private sector workers who will regularly work above and beyond normal shift patterns.

Commenting on the recent ruling, Head of Employment, Susan Mayall said it could have implications for many businesses: “This case holds that all overtime, including voluntary overtime if it is regular and settled for payments now amounts to normal remuneration and will therefore be taken into account when calculating holiday pay for workers.

“The calculation and requirement to include overtime only relates to the four weeks statutory not to the extra 1.6 weeks holiday entitlement given in the UK.

“This is an area of employment law which we believe may revert back to just basic pay being taken into account for holiday pay calculations when and if Brexit happens. As always with employment law it’s a watch and wait game and we will keep our clients up to date on the latest legislation as it affects them and their businesses,” added Susan.

In his judgment, Lord Justice Bean said: “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….There is no separate requirement that the hours of work are compulsory under the contract.”

For advice on Employment Law contact Susan Mayall on 0161 785 3500.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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