16/03/2021
It has been announced that the NHS Staff Council has agreed a framework to enable NHS employers in England to resolve issues in relation to the correct calculation of pay while on annual leave, in respect of regularly worked overtime and additional standard hours (AST), under Agenda for Change.
Background
Section 13.9 of Agenda for Change states that:
“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.”
In the case of East of England Ambulance Service NHS Trust v Flowers and others (2019) the Court of Appeal decided that, when calculating holiday pay, section 13.9 of Agenda for Change means that NHS organisations need to take into account regular voluntary overtime.
The Trust had appealed against the Court of Appeal’s decision and the appeal was due to be heard by the Supreme Court in June 2021. It is our understanding that the claims in Flowers will now be settled on the basis of the Court of Appeal’s decision; and that the hearing in the Supreme Court is unlikely to take place.
Framework Agreement
Under the Framework Agreement that has been reached in the context of the Flowers litigation, it has been accepted that NHS employers in England should include regularly worked overtime and additional standard hours in the calculation of pay when staff are on annual leave.
Corrective Payments
Corrective payments will be made in respect of the financial years 2019/2020 and 2020/2021; and will be based on overtime earned in those years.
Any employee who:
- Is employed on 31 March 2021;
- Has received overtime pay in at least 4 of the 12 months in either of the financial years from April 2019-March 2020 or April 2020-March 2021; and
- Has not already “had their overtime payments taken into account for holiday pay”;
will receive a Corrective Payment if their holiday pay has not previously been calculated to include regularly paid overtime.
The Corrective Payment will be 16% of the total amount of overtime pay received by the employee during these two financial years (and will be non-pensionable); and should be made by 30 September 2021.
So long as the Corrective Payment is made, the unions will not support ET claims against NHS organisations for past failures to include overtime when calculating holiday pay.
What do NHS employers need to do to prepare?
The accompanying FAQs make clear that the national payroll system, the Electronic Staff Record (ESR), will publish information which will help employers identify which staff will be eligible for a Corrective Payment and how much each member of staff will receive.
How will the Corrective Payments be funded?
The FAQs also set out that Corrective Payments will be nationally funded, with funding arrangements to be confirmed by NHS England and NHS Improvement or DHSC.
Are hours worked on a Trust bank included in the Framework Agreement?
No. Calculations will be based on payment for overtime and additional standard time paid over the last two financial years for work done under the substantive contract. Where an employee has worked additional hours as part of a bank contract then this is to be treated separately.
If you would like to discuss this topic in further detail, please contact James Gutteridge, Senior Associate, or Alastair Currie, Partner.
