Overtime Should Be Included In Holiday Pay Calculation

June 1, 2019, By

The recent Court of Appeal case of East of England Ambulance Service NHS trusts v Flowers is the latest in a long line of cases dealing with the complex issue of the calculation of holiday pay.

This latest case focuses on the issue of overtime and considers whether this should be included in holiday pay calculations.

The Court of Appeal decision in East of England Ambulance Service NHS trusts v Flowers approves the Employment Appeal Tribunal decision in Dudley Metropolitan Borough Council v Willetts, which found that voluntary overtime, which extends over a sufficient period of time and occurs on a regular and/or recurring basis should be taken into account when calculating holiday pay.

The current position is therefore that exceptional and unforeseeable overtime payments should not be included in annual leave calculations. However, overtime payments that were “broadly regular and predictable” need to be taken into account. It is worth bearing in mind however that this decision only applies to the basic minimum four weeks’ annual leave provided for by the Working Time Directive and that Working Time Regulations holiday (i.e. the additional 1.6 weeks’ UK holiday entitlement) is calculated differently and in accordance with domestic legislation.