Voluntary Overtime and Holiday Pay

As we are in holiday season, we have been asked a number of times whether overtime payments should be taken into account when calculating holiday pay.

Two recent cases indicate that employees who have been doing mandatory and voluntary overtime over a sufficient period of time, would have this taken into account when calculating holiday pay.

In the recent Flowers v East of England Ambulance Trust (2018) case, the Employment Appeal Tribunal ruled that voluntary overtime should be taken into account if it is paid over a “sufficient period of time”.

The employees of the Ambulance Trust had various clauses in their contracts regarding overtime, some mandatory but irregular and some voluntary and irregular.

The Dudley Metropolitan Borough Council v Willetts case focused on the concept of ‘normal remuneration’ and whether voluntary overtime is included when calculating holiday pay.

The Respondents in the case were electricians, plumbers, and roofers who worked voluntary overtime and received additional standby and callout fees.

The council argued that overtime payments were not considered normal remuneration because they lacked an intrinsic link to the performance of tasks under the employment contract.

However, the outcome was that when an employee is taking holiday, they should not be financially disadvantaged.