The direction of travel in terms of how to calculate holiday pay has been clear in recent years – employees should receive their "normal remuneration" during periods of leave. But there have been questions about whether voluntary overtime pay should be taken into account in calculating "normal remuneration". In East of England Ambulance Service NHS Trust v Flowers the Court of Appeal has confirmed that it should.
The claimants worked in the ambulance service. If their shifts overran, for example because they were still dealing with a patient, they were obliged to complete the relevant task before finishing their shift. This was non-guaranteed overtime for which they were paid and those payments were reflected in their holiday pay. However, staff also undertook voluntary shifts on occasion, although they were not contractually obliged to do so. The question for the Court of Appeal was whether voluntary overtime pay also had to be taken into account in holiday pay calculations, either as a contractual right or under the Working Time Directive (WTD).
The Court of Appeal confirmed the EAT decision that there was both a contractual right and a right under the WTD. In relation to the position under the WTD, the Court of Appeal reviewed the existing CJEU cases, which establish that workers are entitled to receive their normal remuneration while on holiday. The Court of Appeal agreed with the EAT that the relevant question is whether remuneration is "normal", not whether the work is compulsory under the contract of employment.
One paragraph in a recent CJEU decision, Hein v Albert Holzkamm GmbH, indicates that remuneration for voluntary overtime does not have to be taken into account as part of normal remuneration because it is exceptional and unforeseeable. However, the Court of Appeal found that the Hein decision does not mean that voluntary overtime payments never have to be taken into account in calculating normal remuneration. Such a conclusion would have amounted to a handbrake turn by the CJEU, given its previous decisions. In the Court of Appeal's view, the CJEU was drawing a distinction between exceptional and unforeseeable overtime payments on one hand, and those that are broadly regular and predictable on the other. Where overtime is broadly regular and predictable, payments should be treated as normal remuneration for the purposes of calculating holiday pay.
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