Opinion

When is overtime a consideration when it comes to holiday pay?

18th September 2018

In 2017 in Dudley Metropolitan Borough Council v Willetts, the EAT confirmed that purely voluntary overtime should be included in the calculation of holiday pay if such overtime is paid with sufficient regularity so as to constitute “normal” remuneration.

In Flowers v East of England Ambulance Trust, a number of ambulance staff working for the Trust had claimed unlawful deductions from wages for holiday pay, including in respect of non guaranteed overtime which was mandatory and purely voluntary overtime which constituted additional shifts offered by the Trust.

Mr Flowers claimed that voluntary overtime should have been included within the calculation of his holiday pay. In respect of the non guaranteed overtime, it was accepted by the Trust that its employees would not be able to leave at the end of a shift if they were in the middle of an emergency call. Non guaranteed overtime included shift overruns or emergency callouts whereby the employee would need to complete the task. In respect of the purely voluntary overtime, there was no obligation upon the employees to perform this overtime.

The Employment Tribunal had initially decided that only the mandatory non guaranteed overtime should be included as part of Mr Flower’s holiday pay and not the purely voluntary overtime. However the EAT disagreed and found that the voluntary overtime should be included within the calculation of holiday pay and should have been based on the previous three months at work.

Employer Considerations

Flowers is a useful reminder of the principle laid down in Dudley that purely voluntary overtime should be included in the calculation of holiday pay if it is sufficiently regular to amount to “normal” remuneration.

Holiday pay is a complex area and the case law governing it is still developing. In order to calculate holiday pay accurately employers should analyse their practices in relation to overtime and consider whether overtime is sufficiently regular to amount to normal remuneration. If so it should be included in the calculation of holiday pay in order to avoid multiple and costly claims for unlawful deductions from wages, the consequences of which are both financial and reputational.

 

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