The Appeal Tribunal has ruled that voluntary overtime should be taken into account when calculating holiday pay. This follows a steady creep in this direction from previous cases looking at compulsory overtime.
The case in question (Flowers v East Of England Ambulance Trust) concerns a public body, and so was decided under the original European regulations (Working Time Directive) as opposed to the domestic interpretation of those, (The Working Time Regulations) but the distinction may be academic and it is highly likely that future cases will be decided in line with this one under the regulations.
In this case, the employees had two types of overtime:
- Irregular compulsory overtime, where the employee’s shift ran over, for example, if the employee could not finish on time for caring for a patient, and
- Irregular voluntary overtime, which was not in any way compulsory, and worked when it was needed, and the employee wanted hours.
We spend no time on category 1 as it is well established that this type of overtime should be included in holiday pay.
On category 2, the Tribunal ruled that the “Gist” of the directive was to ensure normal remuneration during holidays. To be “normal” it must be worked over a sufficient period of time. The Tribunal did not give a clear answer to what was meant by a “sufficient period of time”.
It did go on to say however, that when calculating holiday pay, items of pay which are not usual or are exceptional, do not need to be included.
Trying to guess whether a particular occasion of overtime should be included when calculating holiday pay could become a weary task. We suggest that it may also be a waste of time. If you are trying to work out whether a single occasion of overtime should be included, it probably shouldn’t, as it is probably a “one-off”.
However, the individual amounts concerned may be quite low on the face of it, but over time could cumulate to a significant amount of underpayment.
The safest course will be to calculate a week’s pay for holiday purposes based on an average of the previous 12 week’s pay. If you do this, you won’t go far wrong. Also, this route means that any occasional overtime which is included by mistake, will have been divided by 12 and therefore reduced significantly.