Workers' holiday pay must include regular voluntary overtime

East of England Ambulance Service NHS Trust v Flowers [2019] EWCA Civ 947

Why care?

Over the past few years, cases have held that "normal remuneration" should be included in holiday pay. This includes not only basic salary, but also remuneration which is "intrinsically linked to the performance of the tasks which [a worker] is required to carry out under his contract of employment" (Williams and others v British Airways plc [2011] IRLR 948).

For a payment to count as "normal", the EAT in Dudley Metropolitan Borough Council v Willetts and others UKEAT/0334/16 has held that it must have been paid over a sufficient period of time on a regular or recurring basis (the Willetts case).

The result has been that, when calculating a worker's holiday pay, both guaranteed overtime and non-guaranteed overtime (which is compulsory for the employee if the employer requires it) must be included.

The Flowers case considers the implications where overtime is voluntary. In this case the claimants brought claims for breach of contract and breach of the WTD directly as the ambulance service is an emanation of the state.

The case

Mr Flowers and other claimants' contracts of employment with their employer the East of England Ambulance Trust (Trust) did not include overtime in their holiday payments. However they sometimes worked both non-guaranteed and voluntary overtime.

They brought employment tribunal claims for both breach of contract and the Working Time Directive 2003 (WTD). The tribunal agreed that, both as a matter of contract and under the WTD, non-guaranteed overtime should be included in the calculation of holiday pay. However, it rejected the claims to include voluntary overtime.

Before the EAT heard the claimants' appeal, another division of the EAT gave a decision in the Willetts case. Applying this, the EAT allowed the claimants' appeal so that voluntary overtime should be included in a holiday pay calculation, both under the WTD and under the contractual wording.

The ambulance service appealed this decision but the Court of Appeal dismissed their appeal. It agreed with both the EAT in this case and the effect of the Willetts decision.

What to take away

NHS organisations need to include all voluntary overtime worked in the three-month reference period prior to holiday being taken (or other locally agreed reference period).

Although this case concerned the WTD, UK tribunals should look at the Working Time Regulations 1998 in such a way as to conform with the WTD. This means that other public and private sector organisations should consider their employees' working patterns. Where a worker's voluntary overtime occurs over a sufficient period of time on a regular or recurring basis this will be considered "normal" pay and such overtime payments should be included in calculations of holiday pay.