Latest holiday pay case in the EAT is far from a bed of roses for NHS employers

Latest holiday pay case in the EAT is far from a bed of roses for NHS employers

Flowers and others v East of England Ambulance Trust UKEAT/0235/17

Over the summer we have seen a further holiday pay case emerge which changes the holiday pay landscape and has particular significance for NHS employers. Flowers and others v East of England Ambulance Trust involved a public sector employer, which meant that consideration was given to the direct effect of the Working Time Directive (WTD) on the Trust and is the first holiday pay case since Bear Scotland which has examined contractual holiday entitlement under the NHS Terms and Conditions of Service (known as Agenda for Change).

The two key findings of Flowers are:

• AfC 13.9 should be interpreted as requiring all overtime pay earned in the three months (or any other agreed reference period) prior to the leave to be included in the calculation of holiday pay. This includes non-guaranteed and voluntary overtime and is regardless of whether the overtime has been paid with any regularity.
• The WTD requires all overtime to be taken into account when calculating the four weeks’ paid leave under the WTD so long as the payments are sufficiently regular and paid over a sufficient period. This element of the decision was in line with the earlier holiday pay case of Dudley Metropolitan Borough Council v Willetts and others UKEAT/0334/16. Click here to read our previous blog on this case.

We understand that the Trust in Flowers has applied for leave to appeal to the Court of Appeal and we don’t yet know whether leave will be granted, but due to the scope and importance of the decision, there is a good chance that it will be.

Some employers who do not already calculate holiday pay per the Willets decision have been considering the logistical challenge of monitoring regularity and frequency of overtime and of paying WTD holiday differently from the purely contractual entitlement. Flowers reinforces and extends Willets for NHS employers. Until a possible appeal is resolved, many Trusts will need to decide whether to review the way they calculate holiday pay or manage overtime.