Normal remuneration

Labour & European Law Review Weekly Issue 588 19 September 2018

It is well established in law that workers are entitled to be paid “normal remuneration” when their holiday pay is being calculated. In Flowers and ors v East of England Ambulance Trust, the Employment Appeal Tribunal (EAT) held that holiday pay should also include voluntary overtime that was sufficiently regular and settled to be taken into account when calculating “normal remuneration”.

Basic facts

A number of Trust employees, who worked in a range of roles to do with the ambulance service, had a clause in their contract which stated that their holiday pay would include “regularly paid supplements, including … payments for work outside normal hours”. It then went on to state that their holiday pay would be calculated “on the basis of what the individual would have received had he/she been at work”.

The employees brought claims for unlawful deductions from wages on the basis that their holiday pay should take account of overtime. This fell into two categories – non-guaranteed overtime and voluntary overtime. Non-guaranteed overtime was also referred to as shift overrun payments which were triggered when an employee was in the middle of carrying out a task which they had to complete beyond the end of their shift.

Tribunal decision

The tribunal held that the non-guaranteed overtime was effectively an essential requirement in that the ambulance workers could not leave their job at the end of a shift if they were, say, in the middle of an emergency. As such, it formed part of their pay. Voluntary overtime, on the other hand, was by its very nature voluntary and was not therefore part of pay for the purpose of calculating holiday pay.

The employees appealed against this aspect of the judgment and the Trust cross-appealed the decision that the clause in the employees’ contracts allowed non-guaranteed overtime to be taken into account when calculating their holiday pay.

EAT decision

Relying on the decision in Dudley Metropolitan Borough Council v Willetts and ors (weekly LELR 536), the EAT held that the tribunal was wrong to hold that the agreement to carry out an unspecified number of hours of voluntary overtime did not give rise to a contractual obligation.

According to the decision in Dudley the claimants just had to show “a pattern of voluntary overtime which was sufficiently regular and settled to be taken into account in the calculation of normal remuneration”. It therefore remitted the claims to be assessed on a case by case basis in accordance with the various considerations set out in Dudley.

As for the Trust’s cross appeal that neither form of overtime fell within the remit of the contractual clause, the EAT held that the whole point of the clause was to calculate holiday pay on the basis of what the employee would in fact have been paid if they had been at work. As such, there was no basis on which to distinguish between non-guaranteed and voluntary overtime and holiday pay should therefore include both payments. In addition, the clause also provided the basis for calculating holiday pay and the EAT therefore remitted the claims for those calculations to be made by the tribunal.

Comment

Gerard Airey of Thompsons stated “This is a case of great importance. It supports the previous judgment that voluntary overtime should be included in the calculation of holiday pay, but it is of more significance to NHS employees as it confirms that they should receive holiday pay in line with NHS Agenda for Change terms and conditions. It is important to note that under those terms all overtime, regardless of the type, should be included in the calculation of all holiday pay, not just the European entitlement.”