The Employment Appeal Tribunal (EAT) has decided that clause 13.9 of Agenda for Change (AfC), which deals with pay during annual leave, gives a contractual right for voluntary overtime to be included in holiday pay. This is regardless of whether such payments are regular enough to amount to "normal" pay.
This EAT decision follows the EAT decision in Dudley Metropolitan Council v Willetts which looked at the obligation to pay voluntary overtime under the Working Time Regulations (WTR) (see our previous alert here). In Dudley, the EAT ruled that voluntary overtime should be included in the first four weeks holiday pay where such payments are "regular enough" to amount to "normal" pay. This recent decision gives a contractual right to employees under AfC, not just a statutory one under the WTR.
In Flowers the Claimants were all employed by the Trust in a range of roles providing ambulance services. The Claimants argued the calculation of their holiday pay should take account of (a) non-guaranteed overtime and (b) voluntary overtime. Following previous case law the Respondent Trust conceded the claim on non guaranteed overtime, so the case centred on voluntary overtime.
The EAT interpreted clause 13.9 to include voluntary overtime. It also decided clause 13.9 describes how to do the maths i.e. holiday pay should be calculated on the basis of what the employee would in fact have been paid if at work based on the previous three months at work, or other locally agreed reference period.
What does this mean for employers?
This is an important case for all NHS employers and we know this issue has been of particular concern to ambulance trusts.
The significance for NHS employers is that any overtime pay received by the employee in the reference period should be included in holiday pay. This is so whether or not it formed part of a regular and settled pattern of overtime worked by that employee.
It is also significant that this is a contractual, not statutory right. This means that the current position set out in the Bear Scotland case (where employees who have a break of more than three months between payments are not be able to argue that they have suffered a series of unlawful deductions) will not apply. This ultimately may lead to far more costly backdated holiday pay claims for voluntary overtime going back 6 years.
We understand that the Respondent has applied for permission to appeal, so we will monitor this case and keep you informed.