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Practices warned about changes to annual holiday pay entitlement

Practices should be aware of possible changes to annual leave legislation, which could force employers to consider staff’s overtime earnings when calculating their rate of annual pay, a medical defence body has warned

The Medical and Dental Defence Union of Scotland has announced they are increasingly being approached by practice managers asking whether overtime needs to be accounted for in holiday entitlement.

At present, statutory holiday pay is based on employee’s basic pay, but two recent tribunal cases have ruled that overtime earnings and commission must be accounted for in holiday pay, so practices should be alert to future changes.

MDDUS employment law advisor Janice Sibbald said: ‘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.’

‘There has been no guidance so far as to back payments attached to this ruling.’

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