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Must Voluntary Overtime be included in Holiday Pay?

In June 2019 the court of appeal ruled that voluntary overtime should be factored into ambulance workers’ holiday pay. Does this mean that you must include voluntary overtime when calculating your employees’ holiday pay?

Background Facts

In East of England Ambulance Service NHS Trust v Flowers and others 2019 the employees were all ambulance workers. Their employment contracts included two types of overtime. These were: (1) Mandatory and non -guaranteed overtime, i.e. when emergency shifts overran; and (2) voluntary overtime. Voluntary overtime was always agreed in advance and covered issues such as staff shortages due to holidays, parental leave and sickness absence.

Working it out

In 2017 several ambulance workers brought a group tribunal claim alleging unlawful deductions from wages. This was on the basis that overtime worked had not been included by the Trust when it made holiday pay calculations.  The tribunal initially found that all mandatory and non-guaranteed overtime should be included in the Trust’s holiday pay calculations, but voluntary overtime should not.

A Matter of appeal

The tribunal’s reasoning for this distinction was that the ambulance workers were not obliged to undertake any voluntary overtime, whereas they could not avoid shifts overrunning due to attending emergency situations.  The workers appealed to the Employment Appeal Tribunal (EAT). It ruled that their voluntary overtime, as well as the mandatory and non-guaranteed overtime, should be taken into account when calculating holiday pay. The Trust then went to the Court of Appeal which handed down its decision in June 2019.

Interesting Decision

The Court of Appeal upheld the EAT’s decision and the ambulance workers retained their right to have all types of overtime included in the Trust’s holiday pay calculations. However, it also stated that the tribunal had not erred in law. So does this mean that you must include all voluntary overtime when calculating your employees’ holiday pay?

Ruling Implications

Thankfully, the Court of Appeal’s ruling does not grant employees the automatic right to have all voluntary overtime included in their employer’s holiday calculations. Instead, each employer will need to make an assessment based on its own employment contracts and the specific circumstances relating to the overtime that’s been worked.

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