The recent Employment Appeal Tribunal (EAT) case of Flowers v East of England Ambulance Trust, has re-emphasised the principle that has been set by previous case law, that when a worker takes holiday, they should receive the level of remuneration that they would have received, had they been at work. That remuneration should include payment for voluntary overtime that has been worked.
In this particular case, the employees of the Trust wanted their non-guaranteed shift over-run payments to be included as well as any voluntary overtime that they signed up for of their own accord. Whilst the tribunal in the first instance decided that the shift over-run payments were part of normal remuneration and therefore should be included within the holiday pay calculation, it decided that as overtime was purely at the employees’ discretion, this should be excluded.
The employees appealed against the latter point and the EAT agreed. Where overtime, voluntary or otherwise, is carried out over a sufficient period of time on a regular and/or recurring basis so as to be deemed ‘normal’ then payments received for this type of wording, should be factored into holiday pay calculations.
Each case will be taken on its own merits and it will be for tribunals to assess whether or not the elements of pay in respect of any overtime are to be regarded as regular remuneration and therefore make a determination as to whether there are any monies owing. The maximum exposure in terms of a claim is 2 years’ worth of backdated holiday pay.
In terms of what this means for your business, you are advised to analyse the regularity with which your workers are getting paid overtime and review your holiday pay arrangements. If overtime is worked, then typically, an average calculation (based on the 12 working weeks prior to the holiday) is used to determine the appropriate level of payment to be made when that holiday is taken.
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Written by Marie-Clare Swallow, Senior HR Consultant