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The ruling has been made, are you ready for the effects?
I’d been expecting the news that we received on Tuesday for some time and was slightly surprised to hear the ruling that overtime should be taken into account when calculating holiday pay (report).
It is expected this will affect five million workers in the UK who, based on this landmark tribunal ruling, will now have their overtime factored into their basic pay. I can envisage that businesses in the UK will be concerned by the Employment Appeal Tribunals decision.
But what is the effect on the service sector because of the ruling? Very few businesses in the sector will have budgeted for this ruling when planning their budgets for the year. If you have done so in anticipation of the ruling, then well done for keeping in touch with developing legislation!
Who loses out?
So who loses out? In the care sector, staff may be required to work overtime as a regular part of their job. This may be because it is key to the operational running of the home or to reduce agency costs. The full detail is not yet available but, if overtime is regular in your business, then back-pay will need to be calculated, probably over 12 months, and paid,
The cash for these payments will need to be found, but, given the ruling could be appealed it may be possible to delay payments pending that appeal. So if an appeal is launched, that may mean some years before the matter is finally resolved.
Furthermore, Vince Cable has announced a task force to look at the impact on businesses and see if ways to reduce the impact on small business can be found.
Vince Cable will certainly be kept busy working with the task force to assess the impact of this new ruling which could have a significant effect on the service sector.
Anita Manfredi of Employer Solutions – QCS HR Expert Contributor
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