Must Holiday Pay Include Regular Voluntary Overtime?
The Court of Appeal considered this question in Flowers v East of England Ambulance Trust and decided that regular voluntary overtime should be included in holiday pay if it is sufficiently regular and it amounts to ‘normal remuneration’. As you will be aware Bear Scotland v Fulton and others previously held that overtime that is compulsory for the employee must be included in the calculation of holiday pay.
In this case, several Claimants who worked for East of England Ambulance Trust worked voluntary overtime, whereby they were free to choose whether or not to work overtime. They subsequently brought holiday pay claims on the grounds that this overtime should be categorised as their normal remuneration and therefore, should be included in their holiday pay.
The Court of Appeal agreed with the Claimants arguments and stated that voluntary overtime should be counted if it is sufficiently regular and settled such that payments made for voluntary overtime amount to normal remuneration. It decided that there is no separate requirement that the hours of work are compulsory under the contract.
Previous case law has held that for a payment to count as "normal", it must have been paid over a sufficient period of time on a regular or recurring basis. This is a question of fact and degree for the tribunal. As such, when determining whether a worker’s voluntary overtime satisfies the threshold for regularity you will need to review this on a case by case basis. In some circumstances this could be fairly obvious, however, there may be cases where it is less clear and legal advice may be necessary to help you determine whether voluntary overtime should be included in holiday pay calculations.
This bulletin is for general guidance only and should not be used for any other purpose. It does not constitute, and should not be relied upon as legal advice.
JMW Solicitors is a Limited Liability Partnership.