Calculating Holiday Pay for Shift-Workers
A recent case from the Employment Tribunal has issued further guidance on the difficult legislation relating to the calculation of holiday pay for shift-workers.
In the case of Flowers and others v East England Ambulance Trust, a group of paramedics bought a claim against their employer for unlawful deduction of wages on the basis that the overtime they worked should have been taken into account when calculating their holiday pay. Holiday pay is calculated by working out the average number of hours an employee has worked in the previous 12 weeks at their average hourly rate.
The claimants often worked two types of overtime: the first was referred to as ‘overrun’, when the claimants had to remain on shift longer than they were meant to because they were responding to an emergency; and the second was voluntary overtime, which the claimants were free to accept or decline as they wished. The claimants argued that both of these types of overtime should have been included in their holiday-pay calculations.
In its judgement, the Tribunal agreed that the ‘overrun’ overtime should be included in the claimants’ holiday-pay calculations. The Tribunal pointed out that when such a scenario occurs, the claimants cannot realistically end their shift and therefore this amounts to involuntary overtime. However, the Tribunal did not agree that the claimants’ voluntary overtime should be included in their holiday-pay calculations.
It reiterated earlier case law, which states that whether voluntary overtime should be included in holiday-pay calculations should be decided on a case-by-case basis and that in this case the overtime was not regular enough to be considered in the calculations.
This case highlights the care that employers must show when calculating the holiday pay for their shift-workers, as mistakes in this area can be very costly to rectify.
Employers should also consider how they organise their rotas, as workers working regular overtime may well be entitled to enhanced holiday pay.