Employer’s appeal dismissed in Flowers litigation

The Court of Appeal has today dismissed an appeal by the East of England Ambulance Service NHS Trust and ruled that regularly worked voluntary overtime should be reflected in the calculation of its workers’ holiday pay. The Ambulance Trust has applied for permission to appeal to the Supreme Court.

In this latest appeal the Trust was challenging two elements of last year’s Employment Appeal Tribunal’s decision, which concerned the treatment of payments for overtime that its workers were neither required nor expected to work.

The first issue was whether the claimants had a contractual claim under paragraph 13.9 of the NHS Conditions of Service (commonly known as Agenda for Change) which reads as follows:

“Pay during annual leave will include regularly paid supplements, including any recruitment and retention premia, payments for work outside normal hours and high cost area supplements. Pay is calculated on the basis of what the individual would have received had he/she been at work. This would be based on the previous three months at work or any other reference period that may be locally agreed.”

On this issue the Court of Appeal endorsed the EAT’s decision that this paragraph gave the workers a contractual entitlement to have overtime (of any kind) taken into account in order to calculate holiday pay, despite the fact that there is no express reference to overtime in this paragraph.

The second issue was whether the workers could bring a similar claim under the Working Time Directive in relation to the four weeks of leave guaranteed by the Directive.  It was not strictly necessary to answer this question, since the workers had succeeded with their contractual claim, but the Court of Appeal went on to address this issue in view of its importance for workers outside the NHS, who would not have benefit of similar contractual terms.

This issue had also been determined in the workers’ favour by the EAT, who had followed an earlier decision of the EAT, Dudley MBC v Willets. The Court of Appeal was invited to make a ruling that Willets was wrongly decided, particularly in view of the latest decision from the European Court of Justice on this issue, Hein v Albert Holzkamm,

The Court of Appeal thought the reasoning in Hein was a little difficult to follow, but concluded that the ECJ was in effect saying that “broadly regular and predictable” overtime should be included in the calculation of overtime, but not overtime which was “exceptional and unforeseeable”. That meant that Willets had been correctly decided, and this aspect of the appeal was also decided in the workers’ favour.

Mills & Reeve, who have been representing the Ambulance Trust in this litigation, has been instructed to apply for permission to appeal to the Supreme Court on both issues.