Holiday pay can be a tricky subject to tackle for employers. However, the recent case of Flowers and others v East of England Ambulance Trust has provided some welcome clarity.
In this case, members of the ambulance crews in the East of England Ambulance Trust had clauses in their contracts relating to non-guaranteed overtime and voluntary overtime. Both types of overtime were irregular and varied amongst members. The issue was whether both types of overtime should be considered when calculating holiday pay, or should voluntary overtime be excluded?
The Employment Appeal Tribunal (EAT) confirmed that both non-guaranteed overtime and voluntary overtime had to be considered.
In reaching their decision, the EAT considered whether voluntary overtime should be viewed as part of normal remuneration – if so, it had to be included in the holiday pay calculation. The EAT followed the decision in the case of Dudley Metropolitan Borough Council v Willetts, which held that voluntary overtime was part of normal remuneration if it was paid consistently over a sufficient period of time. The decision in Flowers meant that just because the ambulance crew members’ overtime was voluntary, it wasn’t separate from their contracts and so it must be considered when calculating holiday pay. The EAT referred to the important health and safety imperative that underpins the Working Time Directive – to ensure workers get sufficient rest – and when viewed through that lens, it only makes sense that holiday pay should include both types of overtime.
Although there is a cost implication for employers and business owners if all types of overtime are included when calculating holiday pay, there should also be a benefit if employees feel able to afford to take their annual leave financially, and as a consequence are properly rested and one would hope, less likely to need to take sick leave.