Editor's message: Meeting short-term business needs through the use of overtime working allows organisations to take advantage of the flexibility of their workforce without the need to take on additional staff.
Employees who work overtime do not have an automatic right to any additional pay; this will depend on the terms of their contract of employment, or on custom and practice. But where there is a premium attached to overtime working, employees can see this as a welcome enhancement to their basic salary.
Employers usually define rates of overtime pay as a multiple of regular or normal pay; other methods include a set hourly rate for overtime or a higher salary to recognise an element of overtime.
Where your organisation makes use of overtime, you need to be aware of the implications of recent case law concerning the inclusion of overtime pay in the calculation of holiday pay.
Rachel Sharp, HR practice editor
Updated to reflect that the Supreme Court allowed the appeal in Tillman v Egon Zehnder Ltd.
In Chief Constable of the Police Service of Northern Ireland and another v Agnew, the Northern Ireland Court of Appeal refused to limit workers' historic claims for the unlawful exclusion of overtime from holiday pay calculations.
In East of England Ambulance NHS Trust v Flowers and others, the Court of Appeal held that ambulance workers are contractually entitled to have voluntary overtime included in the calculation of their holiday pay and, under the Working Time Directive (2003/88/EC), to have it included where it is sufficiently regular and settled.
Updated to include information on Federación de Servicios de Comisiones Obreras (CCOO) v Deutsche Bank SAE, in which the ECJ held that EU law means that Spanish legislation should require employers to set up a system to record workers' actual daily working time.
In Flowers and others v East of England Ambulance Trust, the Employment Appeal Tribunal (EAT) held that voluntary overtime must be included in the calculation of holiday pay for ambulance workers with a pattern of voluntary overtime that is sufficiently regular and settled.
In Dudley Metropolitan Borough Council v Willetts  IRLR 870 EAT, the EAT held that payments for regularly worked voluntary overtime are part of a worker's "normal remuneration" for the purposes of calculating a week's pay in respect of a worker's holiday pay entitlement.
The Employment Appeal Tribunal (EAT) has held that entirely voluntary overtime should be included in normal remuneration for calculating holiday pay.
An employment tribunal has held that ambulance workers' non-guaranteed overtime in respect of "shift overruns" should be included in the calculation of their holiday pay, but that on the facts of this case purely voluntary overtime does not have to be included.
HR and legal information and guidance relating to overtime pay.