Holiday pay update

9th July 2019

Holiday pay update

This subject has dominated HR news for what seems like an eternity now, but it’s important to keep on top of the developments, given that these are issues that could affect most.

W now have the next instalment of the Flowers v East of England Ambulance Trust saga. European law says that holiday pay should be based on ‘normal remuneration’. If pay or hours vary, then an employer must look at the previous 12 weeks and pay the average. But does ‘normal remuneration’ include voluntary overtime?

In Flowers, ambulance workers argued that non-guaranteed overtime (when they were required to stay late at the end of a shift) and voluntary overtime should be taken into account when calculating holiday pay. The initial decision of the employment tribunal was that non-guaranteed overtime should be included in holiday pay, but voluntary overtime should not. The Employment Appeal Tribunal and now the Court of Appeal have disagreed.  They have said that under the Working Time Directive, where the overtime is regular enough to be considered part of normal pay, it should be included in the calculation. It made no difference that the overtime was voluntary and that should be irrelevant.  What mattered was that if the voluntary overtime was not reflected in holiday pay, this could lead to a situation where the workers might not take annual leave, which would defeat the purpose of the legislation.

This is another pro-employee decision on holiday pay, but it does not come as a surprise. If voluntary overtime were not included in ‘normal remuneration’, you could envisage situations where a less scrupulous employer might try to get around the law by setting low basic hours topped up by significant ‘voluntary’ overtime, so there were understandable policy reasons for this decision.

For advice on this or any other issues around holiday pay, contact Andrew West on 01473 298102 or email [email protected].

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