Article

Overtime payments and pay during annual leave FAQs

Read answers to frequently asked questions in relation to the correct calculation of pay while on annual leave for regularly worked overtime.
Agenda for change

12 March 2021

The NHS Terms and Conditions of Service (AfC) Handbook states that when you take annual leave you should be paid as if you are at work. Following a recent Court of Appeal decision, NHS employers have agreed that the calculation of pay during annual leave should include regularly worked overtime.

Corrective payments

1. Why are NHS employers making corrective payments?

The NHS terms and conditions of service handbook states that when you take annual leave you should be paid as if you are at work. Following a recent Court of Appeal decision, NHS employers have agreed that the calculation of pay during annual leave should include regularly worked overtime.

2. Why is this happening now?

The NHS Staff Council has agreed a framework to help NHS employers make corrective payments to eligible employees for the period between 1 April 2019 and 31 March 2021.

3. Will the NHS Terms and Conditions of Service (AfC) Handbook need to change?

No. The NHS Terms and Conditions of Service (AfC) Handbook will not need to change. National discussions have taken place to clarify how NHS employers should interpret section 13.9 of the handbook. NHS employers and trade unions have agreed a framework for employers to assess both eligibility and the value of any corrective payments up to 31 March 2021.

4. What pay elements are covered by the framework agreement?

All pay for regularly worked overtime, which is time above the individual's contractual hours, including time above standard FTE (full-time equivalent) for the grade and additional standard time for part-time staff.

5. What counts as overtime?

Depending on local policy and practice, overtime, or additional standard time, is any paid time above your contractual hours, normally worked either as time after your normal finish time (for example a shift overrun where you had to continue working) or volunteering for additional shifts agreed in advance as overtime.

Working additional hours on an NHS bank does not qualify as overtime.

6. What is the corrective pay period?

The framework agreement provides for corrective payments covering the financial years 2019-2020 and 2020-2021 only. An eligible employee may receive a corrective payment for one or both of the financial years, as outlined below under the eligibility FAQ section.

7. Why have financial years been used?

The corrective payments cover pay for overtime during the two financial years of 2019-20 and 2020-21. This time period has been selected because:

  • It enables corrective payments to be implemented quickly from a data and payroll processing perspective.
  • It provides a corrective payment for the two-year period prior to make sure overtime is included in the calculation of holiday pay from 1 April 2021.

8. What information should individuals get from their NHS employer about the corrective payments?

Staff will be provided with personal information about how their corrective payment has been calculated. NHS employers will also provide information to staff about how questions on the calculations will be answered generally.

In the hopefully rare circumstances, where an employee does not believe that their overtime payments and any corrective payment has been correctly calculated, we would encourage conversations with line managers to address this issue in the first instance. NHS employers will agree an appeals process with trade unions under local partnership working arrangements to resolve any issues.

9. Are Scotland, Wales and Northern Ireland included in the agreement?

This agreement covers England only. An agreement has already been reached in Scotland. Employers in Cymru Wales and Northern Ireland have indicated they will enter discussions with trade unions to resolve this issue.

Eligibility

1. Who is eligible to receive a corrective payment?

To be eligible for a payment staff must:

  • be employed by an NHS employer (as listed in Annex 1 of the handbook) on 31 March 2021; and
  • have received payments in respect of overtime in a minimum of four months out of the 12 months in the financial year 2019-2020 (1 April 2019 to 31 March 2020) and/or 2020-2021 (1 April 2020 to 31 March 2021).

2. An NHS employer has been paying some individuals overtime during statutory annual leave. How will this affect the individual’s payment?

NHS employers will adjust any corrective payments to take account of pay during annual leave that has already been made for overtime. For example, in the ambulance sector, payments made for compulsory shift over-runs during statutory annual leave.
 

3. Why use an eligibility criteria?

Overtime and or additional standard time should have been worked with sufficient regularity for it to count towards holiday pay.

For the purposes of the corrective payments framework agreement  only, NHS employers and the trade unions have agreed that four months in each financial year is an appropriate threshold for establishing regularity of overtime.
 

4. How will staff know that they are eligible?

Staff will be informed by their NHS employer if they are eligible. Employers will be planning to pay the corrective payment before the end of September 2021, and staff should wait to be contacted.

5. Will part-time staff be entitled to a corrective payment?

Yes, eligible part time staff who have worked more than their contracted hours and have received additional pay, which has not been included in their annual leave will be entitled to a corrective payment.

They will be subject to the same eligibility criteria which applies to the pay for overtime above standard hours worked by full-time staff.

6. Will staff still be eligible for a corrective payment if they have worked irregular shift patterns?

Yes, if a member of staff meets the eligibility criteria, they will receive a corrective payment.

7. What happens if a member of staff left employment in the NHS before 31 March 2021?

The framework only applies to staff employed by an NHS employer (as listed in Annex 1 of the handbook) on 31 March 2021.

8. What happens if a member of staff has moved employers?

If staff are employed by an NHS employer on 31 March 2021 (as listed in Annex 1 of the handbook) they may remain eligible for a corrective payment.

Payments should be processed by the employer where the original work was undertaken and may mean that an individual receives a payment from multiple organisations. The previous employer will need to verify that an individual is employed in an Annex 1 organisation which is currently not possible in existing systems due to data governance requirements.

9. What happens if a member of staff has been TUPE transferred to a private company providing NHS services?

This framework agreement will only apply to eligible staff employed by an NHS employer as set out in Annex 1 of the handbook.

10. What if a member of staff has changed their [pay] banding over the last two years?

Changes to roles or pay bandings should not affect eligibility to receive a corrective payment. The calculations will be based on the value of payments made for either overtime or additional standard time worked and recorded on the Electronic Staff Record (NHS national payroll system).

11. A member of staff last worked overtime in March 2019 but not after. Will they be eligible for a corrective payment?

Only employees who have worked overtime or additional standard time in a minimum of four months out of the twelve months in the financial year 2019-2020 (1 April 2019 to 31 March 2020) and/or 2020-2021 (1 April 2020 to 31 March 2021) will be eligible to receive a corrective payment.

There may be some occasions where, for reasons of a protected characteristic, someone has not been able to meet the eligibility criteria (for example, maternity, or long-term disability related sick leave). Employers are urged actively to consider whether the criteria for eligibility should be adjusted in order to ensure that those with a protected characteristic impacted by such circumstances are not disadvantaged.

12. A member of staff has recently changed jobs and no longer does regular additional work. Will they be eligible for a corrective payment?

If an individual meets the eligibility criteria, they will be eligible for a corrective payment based on the overtime pay they received in one, or both, financial years 2019-2020 (1 April 2019 to 31 March 2020) and/or 2020-2021 (1 April 2020 to 31 March 2021).

13. What happens if a member of staff leaves employment after 31st March 2021, but before payments or offers are made?

If a member of staff was eligible to receive a corrective payment and was in employment on 31st March 2021, they will still be eligible for a payment. Employers should make arrangements to process payments in these circumstances.

14. A member of staff retired from the NHS before 31 March 2021. Will they be eligible for a corrective payment?

The framework agreement applies to staff employed by an NHS employer (as set out in Annex 1 of the handbook) on 31 March 2021. Any individual who has left NHS employment is not eligible for a corrective payment.
15. A member of staff retired and returned before 31 March 2021 are they eligible for a corrective payment?

The framework agreement applies to staff employed by an NHS employer (as set out in Annex 1 of the handbook) as of 31 March 2021. Any individual who is employed on this date and meets the eligibility criteria will be eligible for a corrective payment.
16. What do members of staff do if they believe they are eligible, but their NHS employer says they are not?

In the hopefully rare circumstances, where an employee does not believe that their overtime payments and any corrective payment has been correctly calculated, we would encourage conversations between staff and their line managers to address this issue in the first instance. Staff will need to provide evidence, for example, their payslips, payments that they have received for either overtime, or additional standard time. This information is important to help employers determine if staff are eligible.

There may be some occasions where, for reasons of a protected characteristic, someone has not been able to meet the eligibility criteria (for example, maternity, or long-term disability related sick leave). Employers are urged actively to consider whether the criteria for eligibility should be adjusted in order to ensure that those with a protected characteristic impacted by such circumstances are not disadvantaged.

Implementation

1. What do NHS employers need to do to prepare?

The national payroll system, the Electronic Staff Record (ESR) will publish information taken from the national payroll system which will help employers identify which staff will be eligible for a corrective payment and how much each member of staff will receive.

2. How will employers know if staff have worked overtime?

Most NHS employers use the Electronic Staff Record (ESR) HR and payroll system to manage payments to staff. ESR uses a system of pay elements to categorise payments into different groups reflecting payments for different types of work – for example to differentiate between basic pay, shift work or overtime. These pay elements, which are shown on staff’s pay slip, will be used as the basis to determine if they have completed additional activity.

3. Will eligible staff need to make an application to get this payment?

No. Payroll and HR departments will notify staff of their entitlement and how and when their corrective payment will be made. Staff will receive personal information about how their individual corrective payment has been calculated.

4. When will the payment be made?

NHS employers are committed to using all reasonable endeavours to make corrective payments to all eligible staff by 30 September 2021.

5. Who will calculate the payment?

Payroll departments will calculate the payment and notify staff of the amount and date of payment.

Existing claimants

1. A member of staff has a (stayed) legal claim – what will happen to that?

NHS employers and trade unions have agreed to work collectively (both nationally and locally) to resolve outstanding legal claims.

The existing legal claims lodged in the Employment Tribunal or the County or High Court, will be resolved through local settlement discussions between the relevant NHS employer and the claimant along with their legal advisor (COT3 settlement process).