Practices to prepare for changes to holiday entitlement


For immediate release: Wednesday, 27 August 2014

Practices should be prepared for possible changes to the way holiday entitlement is calculated in relation to staff who work overtime, says UK-wide medical defence organisation MDDUS.

MDDUS is issuing the warning in light of a growing number of calls to our in-house employment law advisory team from practice managers looking for advice on whether staff working overtime should receive additional holiday pay.

At present, statutory holiday pay is based on an employee’s basic pay. However, a couple of recent tribunal cases, which are under appeal, have ruled that holiday pay should reflect all elements of pay received by the employee including allowances and overtime.

“Annual leave, overtime and holiday pay are particularly complicated, ever changing and contentious areas of employment law,” says MDDUS employment law adviser Janice Sibbald.

“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.”

In the recent case involving 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.

“It was commented that the payments were ‘intrinsically linked’ to the performance of the tasks he was required to carry out under his contract of employment and consequently should be taken into account when calculating his holiday pay,” says Sibbald.

Another recent case, Lock v British Gas Trading Ltd, was heard at the European Court of Justice. “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,” says Sibbald.

“It was claimed that these financial implications may deter him from taking annual leave which is contrary to the purpose of WTD. It was argued that the commission was directly linked to the claimant’s work and should therefore form part of his holiday pay calculations.

“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.”

Sibbald adds: “Once we have further clarity on the position we will keep our members fully informed. In the meantime, they can call our employment law team if they have any concerns.”


For further information contact Richard Hendry on 0845 270 2034 or 07976 272266, or email

Note to editors

MDDUS (The Medical and Dental Defence Union of Scotland) is a medical and dental defence organisation providing access to professional indemnity and expert medico- and dento-legal advice for doctors, dentists and other healthcare professionals throughout the UK. For further information on MDDUS go to

This page was correct at the time of publication. Any guidance is intended as general guidance for members only. If you are a member and need specific advice relating to your own circumstances, please contact one of our advisers.

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