Overtime pay during annual leave payment information

Understand the context around the payment information and funding for the overtime during annual leave agreement.
Agenda for change

12 March 2021

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. Find out how funding will work for this outcome with the below FAQs.

Payment information

1. Will this be nationally funded?

Yes (according to central estimates, which will be updated at the point that actual payments processed).

2. How will employers receive funding for this?

Funding arrangements will be confirmed by NHS England and NHS Improvement or DHSC, through usual financial reporting channels.

3. What payment will a member of staff receive?

Staff who meet the eligibility criteria in the framework agreement will receive a corrective payment of 16 per cent (the multiplier) of the total pay for overtime, and additional standard time, received in the financial year 2019-2020 (1 April 2019 to 31 March 2020) and/or 2020-2021 (1 April 2020 to 31 March 2021). These payments are non-pensionable and will be subject to employer deductions for tax and NI.

4. Why use a multiplier?

Data on the details of actual overtime and additional standard time worked may not have been retained or may be incomplete. However, records of the payments made for overtime, and additional standard time, are kept.

A percentage multiplier is the most pragmatic means of calculating a corrective payment based on the payments already made for the overtime and additional standard time worked.

5. Why is the multiplier set at 16 per cent?

The 16 per cent multiplier has been agreed to reflect a combination of the period of time that overtime was not included in annual leave pay calculations, the number of eligible staff, the overall estimated cost of the framework agreement and annual leave entitlement set out in the NHS terms and conditions handbook.

This multiplier is intended to appropriately compensate eligible staff. However, it is only being used for the purposes of the corrective payment and has no wider application.

6. What corrective payment will part time staff receive?

The same multiplier and eligibility criteria will apply to eligible part time staff for any payments received for work above their contracted hours. This could be additional standard time and/or overtime.

7. Will this payment be pensionable?

No. This payment is not pensionable.

8. Will payments be taxed?

Yes. These payments will be subject to tax deductions and national insurance deductions at source.

9. Will this payment affect state benefits received by staff?

State benefits which depend on national insurance contributions (NICs) may be affected by a corrective payment. Benefits which do not depend on NICs will not be affected. Members of staff in receipt of state benefits dependent on NICs should contact their benefit provider. More information on State benefits can be found on the Gov.UK website.

10. An NHS employer has a local agreement in place and has been making some payments already for non-guaranteed overtime on statutory annual leave. Will staff still get a payment?

These agreements are sometimes referred to as Bear Scotland payments, and include non-guaranteed overtime based on 20 days statutory annual leave.

NHS employers will take into account any previous payments of this type made to employees when calculating any corrective payments.

This framework agreement considers all overtime (voluntary and non-voluntary) and covers all contractual annual leave.

11. Does this override any local agreements to resolve historic issues related to the calculation of pay on annual leave and overtime payments outside the timescales set out above?

No. This framework agreement enables NHS employers to access national funding to correct overtime pay when employees are on annual leave with national trade union support.

Where different commitments have been made locally, before 1 April 2019, NHS employers will need to work with trade unions to decide how the commitment will be delivered.

12. What about the periods before 1 April 2019? Are members of staff entitled to corrective payments for these?

The NHS Staff Council has agreed that this corrective payment is the best way to resolve disputes on the treatment of overtime and additional standard time within annual leave pay.

No further corrective payments will be made.

What is included in the payment?

1. Will cost of living increases to pay be considered in the calculation of corrective payments?

Yes. Corrective payments are based on the actual overtime payments staff received in the financial years 2019-20 and 2020-21 so will already reflect cost of living increases.

2. Does the corrective payment take account of the extra hours worked during the pandemic?

Yes. The calculation of corrective payments will include all overtime and additional hours worked in the financial years 2019-2020 (1 April 2019 to 31 March 2020) and/or 2020-2021 (1 April 2020 to 31 March 2021) where the criteria in the framework agreement is met.

3. Will overtime pay received by part-time staff who have worked more than 37.5 hours in a week during the pandemic be included in their corrective payment?

Yes, providing they meet the eligibility criteria, all payments for overtime and additional standard time will be included in the calculation of the corrective period in line with this framework.

4. What forms of additional activity are included in this agreement?

The Electronic Staff Record (ESR) will work with NHS employers to provide guidance on the types of payment that should be included within the descriptions of overtime in payroll systems.

5. Are hours worked on a trust bank included in the Framework Agreement?

No. The calculations will be based on payment for overtime and additional standard time paid over the last two financial years (1 April 2019 to 31 March 2020 and/or 1 April 2020 to 31 March 2021) for work done under the substantive contract.

6. Is unsocial hours pay included in this framework agreement?

No. This framework agreement includes all pay for regularly worked overtime, which is time above the individuals’ contractual hours, including time above standard FTE (full-time equivalent) for the grade and additional standard time for part time staff.

7. What about TOIL?

Time off in lieu (TOIL) is taken instead of a payment for overtime. This means staff are able to take time away from work equivalent to the extra hours worked. However, where overtime is not taken off in lieu within three months, and is paid as overtime in line with section 3 of the NHS terms and conditions of service handbook, this will qualify as overtime.