Under the Working Time Directive, all employees have the right to a minimum of four weeks paid annual leave. In other words, staff must receive their normal pay while on holiday.
However, in June 2019, the N Flowers and others v East of England Ambulance Trust case, heard at the Court of Appeal, held that compulsory overtime in respect of shift overruns should be included in the totting up of employees’ holiday pay.
It was argued that leave calculations failed to take into account regular extra shifts and hours, which left many people considerably out of pocket.
The ruling means members of staff who regularly undertake overtime or work beyond their normal shifts must now have these hours taken into account for their holiday pay.
However, the case is likely to leave employers scratching their heads.
The court found that holiday pay must correspond to the ‘normal’ remuneration the employee receives during periods of work. This means voluntary overtime must, therefore, be included if it is worked on a regular enough basis to the extent that it can be considered ‘normal’.
Unfortunately, the court did not set out clear guidelines as to when voluntary overtime would or would not be considered normal, and therein lies the rub.
So, employers will need to make a subjective determination based on the circumstances of their employees and that, of course, might lead to difficulties.
Employers should not ignore the issue, and must look at each situation on a case by case basis, applying a consistent approach to all staff who work voluntary overtime. If an employee routinely accepts voluntary overtime and has done for a long time, it is likely that allowance will have to be made for this in their holidays.
Employers will clearly be taking a risk to do otherwise, as it is clear that the courts are looking to find in favour of workers in this situation. They should, therefore, undertake an audit of all staff members who undertake voluntary overtime to ensure each case is properly looked at; if in doubt, take professional advice.
Kevin Jones is partner, head of national employment and HR team and head of the Bristol office at Clarke Willmott