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When Should Overtime Be Included in Holiday Pay Calculations?

on Friday, 09 June 2017.

Holiday pay and overtime is a complex and developing area of law. The general trend in case law is that all overtime should be included in holiday pay calculations, as long as that overtime is part of an employee's 'normal remuneration'.

However, the tribunals have drawn a clear distinction between non-guaranteed overtime and voluntary overtime in a recent case. So, should you include overtime when calculating your employees' holiday pay?

We would advise that caution should be taken not to rely too heavily on this distinction and the decision was actually reached following consideration of what was included as the employee's normal remuneration.

The Example of Flowers & Others v East of England Ambulance Trust

All of the claimants are employed by East of England Ambulance Trust and have normal working hours, in addition to which they may work two different types of overtime:

  • non-guaranteed overtime: where a shift overruns, for example, if an employee is in the middle of an emergency
  • voluntary overtime: where staff can choose to work extra shifts when offered with no obligation to take up

The tribunal held that non-guaranteed overtime should be included in holiday pay calculations but voluntary overtime needs not be. This conclusion was reached on the basis that it was not open to any of the claimants to leave their job at the end of the shift if they were in the middle of an emergency call. It was an essential requirement of their contractual role that they would remain on shift. On the other hand, the voluntary overtime, was just that: purely voluntary.

Best Practice for Employers

As mentioned above, we would advise against relying solely on the distinction between voluntary and non-guaranteed overtime. You should instead consider the frequency in which voluntary overtime is worked and whether it should be regarded as 'normal remuneration'.


For further information, please contact Jenny Marley in our Employment Law team on 0117 314 5378.

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