The way holiday entitlement is calculated for staff who work overtime could be subject to change, practices have been warned.
Increasing numbers of practice managers have been seeking advice on whether staff working overtime should receive additional holiday pay.
Currently, statutory holiday pay is based on an employee’s basic pay.
But recent tribunals, which are under appeal, have ruled that holiday pay should reflect all elements of employee pay including allowances and overtime.
In Neal v Freightliner Ltd, the Birmingham tribunal held that a freight worker was entitled to have overtime payments and shift premiums counted towards the calculation of his holiday pay, not just basic pay as previously thought.
And in Lock v British Gas Trading Ltd it was ruled that Lock’s right to paid annual leave (under the Working Time Directive) was infringed as his future salary was reduced because he was unable to generate commission whilst on holiday.
Employment law adviser at medical defence union MDDUS, Janice Sibbald said: “Annual leave, overtime and holiday pay are particularly complicated, ever changing and contentious areas of employment law.
“We are currently advising practices that there is no need to alter internal policies at present although this may change as a result of the two tribunal cases which are under appeal. We do advise that practices with a high amount of overtime may wish to think about contingency planning and set aside some budget for this.”
“Practices may wish to advise employees that they are aware of the issue concerning whether or not statutory holiday pay should reflect all elements of their pay and will monitor the consequences of the appeals.”