In June, the Supreme Court was due to give the final word on holiday pay and overtime in East of England Ambulance Trust v Flowers.
Back in 2019, the Court of Appeal decided that voluntary overtime should be included in holiday pay. Although the Flowersemployees had a contractual right to overtime, the Court said the situation was the same under the Working Time Directive. Voluntary overtime should be included in holiday pay calculations where the overtime is regular enough to be considered part of normal pay. The fact that the overtime is voluntary is irrelevant.
If this weren’t the case, workers might be discouraged from taking annual leave which would undermine the purpose of the legislation. Other policy reasons were at play here too. If voluntary overtime were excluded, unscrupulous employers might set low basic hours, to be topped up with ‘voluntary’ overtime, in order to reduce holiday pay entitlements. The employer appealed.
The Supreme Court hearing was due to take place on 22 June 2021 but was vacated after communication from the parties involved. It is believed that the case may have settled on the basis of an NHS wide arrangement in England for holiday pay to include regularly worked overtime and additional standard hours. Existing claims will apparently be settled locally.
This outcome doesn’t necessarily mean that the Court of Appeal’s judgment is the final word on holiday pay and voluntary overtime. The Court of Appeal decision included discussions about a case from the Court of Justice of the European Union (Hein) which seems to contradict this position. There may yet be more litigation on this issue. However, in the meantime, employers should ensure that regular voluntary overtime is included in holiday pay calculations unless and until the next instalment in the holiday pay saga.