Accounting for voluntary overtime when calculating holiday pay

A recent Court ruling has clarified exactly where and when employers should account for voluntary overtime when it comes to calculating holiday pay.

The news follows a case at the Employment Appeal Tribunal (EAT) which saw members of an ambulance crew argue that voluntary overtime they worked on a regular basis should be taken into account when their employer worked out their holiday pay entitlement.

The workers, who were contracted to work ‘non-guaranteed’ overtime but could work ‘voluntary’ overtime if they wished to, said that receiving holiday pay accounting for these voluntary hours should be part of their ‘normal remuneration’ due to the fact it would be paid over a ‘sufficient period of time’.

However, their employer disagreed, pointing out that different crew members often worked different levels of voluntary shifts.

They added that as an employer, they were not obliged to offer the extra hours to their staff and that, equally so, their staff were not obliged to agree to work them.

Nevertheless, the EAT ruled in favour of the workers, finding that holiday pay should always correspond to any ‘normal remuneration’ received by an employee while not on holiday.

This is dictated by holiday pay rules, which effectively make provision so that there is no financial disadvantage of a worker taking a holiday.

In short, this means that in all instances where common work patterns – whether voluntary or compulsory – prevail over a significant period of time, any overtime pay given to employees for that work needs to be accounted for by the employer when calculating holiday pay.