Holiday Pay: should voluntary overtime be included?
Yes, if it’s paid over a sufficient period.
In the recent case of Flowers v East of England Ambulance Trust the EAT had to consider whether to include voluntary overtime in its holiday pay calculation. The Claimant employees were all employed by the Trust in a range of roles concerned with the provision of ambulance services. The issue was whether their holiday pay should take account of overtime falling within two categories: non-guaranteed overtime (also known as shift overrun payments which related to times when there was a requirement to continue working so that patient care was not compromised) and wholly voluntary overtime. It was eventually conceded by the Trust that the non-guaranteed overtime should be taken into account, but they challenged the inclusion of purely voluntary overtime.
The EAT found that the overarching principle is that normal remuneration must be maintained in respect of annual leave to ensure that a worker does not, by taking leave, suffer a financial disadvantage which may deter him from exercising that right. Payments in respect of overtime (whether that is compulsory, non-guaranteed, or voluntary) constitute remuneration. For a payment to count as ‘normal’ it must have been paid over a sufficient period of time – this will be a question of fact and degree. The indication given, whilst not precise, was that voluntary overtime worked one in every four or five weeks would be sufficiently regular to count as ‘normal’ and should be included.
This does not neatly answer all the issues for practitioners, but what is clear is that:
- Guaranteed overtime should always be included in holiday pay calculations.
- Non-guaranteed overtime, which is compulsory when offered, should also always be included.
Purely voluntary overtime, where there is no obligation to offer it and no obligation to do it if offered, should be included if it is sufficiently regular or recurring so as to qualify as ‘normal’.
For more information, please contact Nick Hurley.
News & Insights
COVID-19: Considerations for companies
An essential toolkit setting out key issues that companies and directors should consider during this uncertain time.
Furlough fraud and other errors in coronavirus support claims: last chance saloon
Hugh looks at the recent clamping down of abuse of the furlough scheme by HMRC and the impact of the Finance Act 2020.
New Immigration System Post-Brexit
What can we expect from the new immigration system after 1 January 2021?