EAT rules on voluntary overtime and holiday pay, but decision subject to appeal

The Employment Appeal Tribunal’s decision in Flowers v East of England Ambulance Service NHS Trust, in which Mills & Reeve represented the respondent, is the latest in a line of EAT decisions dealing with voluntary overtime.

There were two primary issues on appeal, both concerned treatment of purely voluntary overtime – ie overtime which the claimants had no contractual obligation to work and which therefore did not necessarily fall into a predictable pattern. This is to be distinguished from guaranteed overtime (ie overtime hours which were both contractually guaranteed and compulsory) and non-guaranteed overtime (ie overtime which the employers were not obliged to offer, but which the employees would be obliged to work if asked).

The first issue was whether the NHS Trust was obliged under the Working Time Directive to include voluntary overtime in its calculations of the core four week’s paid holiday pay guaranteed by the Directive, the NHS Trust having conceded that non-guaranteed overtime pay that was normally received should be included for these purposes. The EAT has overturned the ET’s ruling that voluntary overtime could not in these circumstances be regarded as “normal” remuneration. It has said that in each case the tribunal would need to look at the pattern of working and assess whether it was sufficiently regular to count as normal remuneration.

The second issue was whether the claimants had an alternative contractual claim under paragraph 13.9 of Agenda for Change which reads as follows:

“Pay during annual leave will include regularly paid supplements, including any recruitment and retention premia, payments for work outside normal hours and high cost area supplements. Pay is calculated on the basis of what the individual would have received had he/she been at work. This would be based on the previous three months at work or any other reference period that may be locally agreed.”

The ET agreed with the NHS Trust that this wording did not extend to voluntary overtime, but disagreed with the NHS Trust in finding that it did extend to non-guaranteed overtime. On appeal, the EAT ruled that paragraph 13.9, in effect, required contractual holiday pay to reflect all overtime pay received during the relevant reference period, regardless of the regularity with which it was paid.

It is this aspect of the decision which is potentially of greatest significance across the NHS, though its effect may be mitigated in some NHS Trusts by the practice of engaging bank workers under separate contracts, rather than adding the additional hours worked on the bank on a purely voluntary basis to their normal contractual hours.

Mills & Reeve has been instructed to appeal against both elements of this decision, and has now lodged an application for permission to appeal with the Court of Appeal.