Holiday pay / overtime EAT decision: Implications for the Health Sector and dealing with the BMA Letter on Holiday Pay for doctors - DAC Beachcroft

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Holiday pay / overtime EAT decision: Implications for the Health Sector and dealing with the BMA Letter on Holiday Pay for doctors

Published On: 13 November 2014

Last week we reported the decision in the Bear Scotland Ltd v Fulton (and other conjoined cases) where the EAT confirmed that regular mandatory overtime should be included in holiday pay.

Click here to see our alert.

The decision was much anticipated and has attracted extensive media coverage. In this alert, we look at the specific implications for the Health Sector. We also deal with how NHS bodies should respond to the BMA letter demanding backdated holiday pay for doctors.

How does the Bear Scotland decision affect the Health Sector?

Broadly there are 3 categories of staff to consider:

Staff employed on AfC

This will be the majority of staff in the NHS. Under AfC para 13.9:

"Pay during annual leave will include regularly paid supplements, including any recruitment and retention premia, payments for work outside normal hours and high cost area supplements. Pay is calculated on the basis of what the individual would have received had he/she been at work. This would be based on the previous three months at work or any other reference period that may be locally agreed."

So provided NHS bodies have been paying in accordance with AfC they should be compliant with Bear Scotland for most employees. However:

  • Where they haven't been taking into account all regularly paid supplements over the 3 month period preceding annual leave they may be exposed;
  • If NHS bodies have agreed a longer reference period than 3 months with local trade unions, they may be exposed where this results in lower holiday pay than if calculated over a 12 week period. However such claims would involve fairly complex calculations and may be of limited value so it's unlikely that many such claims would be brought;
  • There is also a theoretical risk that 3 months under AfC is not the same as the 12 week reference period required under the Working Time Regulations calculation. We consider the risk of claims arising from this distinction to be small.

Doctors and Dentists

The national contracts for doctors (both consultants and junior doctors) are silent on the issue of pay for annual leave (which will vary between 5 and 6 weeks annual leave). A number of NHS bodies calculate pay for doctors in the same way as they calculate holiday pay for AfC employees. Again these NHS bodies should generally face little exposure subject to the points made above about AfC staff.

However, where NHS bodies have paid doctors for annual leave based on basic pay only, they will face exactly the same risk of claims as private sector employers who have not paid annual leave in accordance with Bear Scotland.

This is something the BMA are alert to and they are writing to NHS bodies to ascertain their position - so this is not an issue that can be ignored. Our view would be that NHS bodies should not rush to respond to this immediately but simply confirm in due course that they are reviewing their arrangements to ascertain the position. If they are correctly paying there should be no issue. If they are not, then a non-committal response may mean the 3 month period has elapsed and so claims are out of time. We can help with any further responses if these are needed.

Bank Staff and other types of worker on non-national terms and conditions

Where an NHS body directly engages its own bank staff and other workers (whether they are employees or workers) regardless of whether these staff also have substantive employment with the NHS body, they will have a right to holiday pay calculated in accordance with Bear Scotland principles. This means holiday pay should include any regular supplements or allowances (e.g. unsociable hours payments and mandatory overtime).

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