Holiday pay bonus

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Employees will be hoping that a ruling on November 4 will bring them a higher wage packet when they take holidays.

An employment tribunal ruled in favour of an employee that holiday pay should reflect overtime pay as well as basic wage.

In the case the employee worked 35 hours per week plus overtime.

His standard day was seven hours but that regularly became nine to 12 hours depending on how busy they were at work.

The employer maintained the work was voluntary and that the holiday pay should only be worked out on a basic week of 35 hours.

The tribunal held that the extra hours worked were intrinsically linked to the performance of his role.

The employment tribunal found the employee was underpaid!

Since the ruling unions have been rallying their members to push employers to implement these changes.

Employers and businesses could now panic, reach for their calculators or call their professional advisors…..BUT stop, wait and take time to allow this to all be formalised.

This is just one case and, yes, it has been successful but an appeal has been lodged and expected to be heard in February 2015.

Vince Cable has set up a task force to assess the impact of the ruling. The task force will provide a forum to discuss how the impact on the business can be limited. Government will take this matter as urgent.

The tribunal did find that all elements of “normal remuneration” are to be paid during annual leave.

They also found that normal remuneration should be considered over a “sufficient period” of time.

The tribunal did not give guidance on how to calculate “normal remuneration” – does this include bonuses, commissions, and other non standard pay elements.

The tribunal did not give guidance on what is a “sufficient period” of time to look at when assessing the “normal remuneration” prior to a holiday period.

The tribunal did confirm that only the 20 days standard holiday is included and that the eight days bank holidays are not needed to be calculated this way.

Action or no action?

Employers and businesses this is your decision:

1) Start to pay holiday pay at a higher rate now, including overtime, commissions or other elements

2) Or wait until the task force and the future appeal bring the clarification on what to include and when to start this from.

It is hoped that clarity on these unknowns will provide us with a method of calculation by the end of February 2015.

It’s your choice whether to start making changes now.

If you require further detail or guidance specific to your business please feel free to contact us.