The Employment Appeals Tribunal (EAT) has recently awarded a ruling in favour of the NHS staff. In the Flower v East of England Ambulance Trust, the staff had won the right to claim six years in underpaid holiday pay.

As per the employment terms and conditions of the ‘Agenda for Change’, the staff were allowed all voluntary overtime payments in lieu of the holiday pay.

The Right of Holiday Pay

Workers have the right to receive holiday pay as per the Holiday Pay Act of 1938. It is a type of paid time off that workers receive when they go on a holiday. The payment is calculated based on the average earnings in the past three months.

Previously, the holiday pay was paid only when workers go on a holiday. However, this has been a subject of criticism and legal challenges.

Holiday payment claims are generally brought under the Employment Rights Act 1996. The claim seeks compensation for a series of unlawful deductions. But proving the claim case has been difficult in the past due to technical arguments employed by the employer. The law also provides that claims after1 July 2015 cannot go more than two years.

In the present case, the workers were employed for the ambulance service. Their nonguaranteed overtime included holiday pay. But the voluntary overtime did not include any holiday pay. This was regarded as a contractual and statutory right of employees.

The right to receive holiday pay was included in the NHS terms of employment. It was clearly stated that the paid annual leave will consist of regularly paid supplements and overtime. However, NHS had argued that voluntary overtime is included in the holiday pay.

The EAT had relied on Dudley Metropolitan Borough Council v Willetts case in making the decision. It stated that voluntary overtime should be a part of the holiday pay. This should be the case when the employees have been regularly given the pay. Therefore, the voluntary overtime amounted to holiday pay. As per the terms of the contract, workers had the right to receive this pay as part of the holiday pay.

Aftermath of the Decision

The current ruling by the EAT has set a precedent regarding holiday pay. All voluntary and nonguaranteed overtime payments must be accounted for when determining the holiday pay. The decision will have implications for workers in the UK who are employed under the ‘Agenda for Change’ employment terms.

Employees can now make a claim for underpaid holiday pay going back to six years. This could cost the company millions of pounds. The decision will also have relevance to employees who have been employed in other agencies under the employment terms similar to one adopted by the NHS.

But the question remains whether the overtime should be a part of the pay in case there is no similar contractual clauses.