Monthly Archives: February 2016

Commission Payments Add Value to Holiday Pay!

FG Solicitors - Holiday Pay CommissionSUMMARY: Employers will need to take into account commission payments when calculating holiday pay.

The Employment Appeal Tribunal (“EAT”) has handed down its decision in the case of British Gas Trading Limited v Mr Z J Lock & Secretary of State for Business, Innovation and Skills.

The issue for the EAT, in the Lock case, was whether holiday pay must take into account elements of normal pay such as commission. In October 2014, the EAT was already scrutinising how employers calculated holiday pay and ruled in Bear v Fulton that employers must take into account non-guaranteed overtime payments when calculating pay for the basic four week holiday entitlement under regulation 13 of the Working Time Regulations 1998. Unsurprisingly, in Lock, the EAT has decided that workers’ remuneration for annual leave periods must also include both commission and basic pay, if this is what they are normally paid.

The Law:

Under the Working Time Regulations 1998 (“WTR”) all workers have a statutory holiday entitlement of 5.6 weeks’ annual leave and they are entitled to be paid at the rate of a week’s pay for each week of statutory holiday. This entitlement is pro-rated for part-time workers.

The WTR derives from the European Working Time Directive (“WTD”), however, the WTD only entitles employees to 4 weeks’ holiday, which is 1.6 weeks’ less than the WTR entitlement.

The Facts of the Lock case:

Mr Lock, who was employed by British Gas as a salesman, had a remuneration package that included a basic salary plus commission which was based on the number and type of contracts he persuaded customers to enter into.  However, the remuneration that he received when he took holiday consisted of basic salary and any commission which he had earnt prior to his leave commencing but that fell due during his period of holiday. This meant he could not earn commission when he was on leave and, as his basic pay was significantly less than his normal pay, this was a disincentive to take annual leave.

In April 2012, Mr Lock claimed to an Employment Tribunal (“ET”) that the failure to pay him commission for the period that he was on holiday leave was contrary to the WTR. As the WTR derive from European law, the ET referred the matter to the Court of Justice of the European Union which ruled that the WTD provides that results based commission should be taken into account when calculating holiday pay. The ET subsequently held that the WTR could be interpreted so as to include commission payments in the calculation of holiday pay for the four weeks’ annual leave provided by Regulation 13 of the WTR.

The ET’s decision was appealed by British Gas. The EAT dismissed the appeal.

Implications for businesses:

  • If workers’ remuneration ordinarily comprises basic pay and commission businesses will need to calculate holiday payments for a worker’s 4 weeks’ statutory holiday entitlement (pro-rated for part-time workers) so that it includes commission which would have been earned but for the taking of leave.
  • Businesses may choose to pay the remaining 1.6 weeks’ statutory entitlement excluding commission, which would have been earned but for the taking of leave.
  • Failure to include commission when calculating holiday pay for the 4 weeks’ entitlement means the worker may apply to the ET for any underpayments provided that the claim is made within 3 months of that underpayment being made. If a claim involves a series of underpayments, any claims for the earlier underpayments will fail if there has been a break of more than three months between such underpayments.
  • Any claims presented to the ET for a series of backdated deductions from wages, including any shortfall in holiday pay, will be limited to cover a period of a maximum of 2 years.

British Gas Trading Limited v Mr Z J Lock & Secretary of State for Business, Innovation and Skills UKEAT/0189/15

Contact Details

For more details about the issues in this article or if you would like advice on how to calculate holiday pay, please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Fast & Furious!

And The Winner Is…

Ben Baxter from Altodigital Networks Ltd who achieved the fastest lap time of 10.52 seconds around the FGS Scalextric track, winning a bottle of bubbly and a free contract review!

All lap times are below:

Leaderboard

We hope that you enjoyed the event and we look forward to seeing you soon for our next FGS challenge!

Contact details:

fgmedia@fgsolicitors.co.uk

(0) 808 172 93 22

HOT OFF THE PRESS: Commission to be included in holiday pay

Megaphone - Hot Off the Press (123rf ref 8981071)The Employment Appeal Tribunal (“EAT“) has given its decision in the Lock case today.

In summary, the EAT has decided that workers’ remuneration for annual leave periods must include both commission and basic pay if this is what they are normally paid.

We will be producing a full update on the decision and its implications for businesses. However, if you have any questions in the meantime, please do not hesitate to contact a member of our employment law team.

Contact details:

fgmedia@fgsolicitors.co.uk

+(0) 808 172 93 22

Business Exhibition – 19 February 2016

160216 MK ChamberFGS exhibiting at the MK Chamber Business to Business Exhibition this Friday, we hope to see you there. Come and meet our team throughout the day to help deal with any enquiries you may have.

Don’t Miss Out!

Fast and Furious - a chance to win a bottle of Bubbly and a Contract Review!

Time:
9:30am – 3:30pm

Venue:
Novotel Milton Keynes
Saxon Street, Leyburn Court
Heelands, Milton Keynes
Bucks, MK13 7RA

Contact Details

If you would like to get in touch prior to this event, please contact us:

+44 (0) 808 172 93 22

info@fgsolicitors.co.uk

Safe Harbor Good News Update

160212 Data TransferSUMMARY: Safe Harbor decision to be replaced by EU-US Privacy Shield?

As an update to our article on the Safe Harbor, the European Commission and the US have now reached political agreement on the “EU-US Privacy Shield”.

As part of this framework, the US has ruled out indiscriminate mass surveillance (see question 1).

At the moment, details of the arrangement still need to be finalised and it is envisaged that this will occur over the coming weeks.

In the meantime, the alternatives to the Safe Harbor set out in our article (see question 3) still continue to apply. The Article 29 Working Party intends, however, to consider whether Standard Contractual Clauses and Binding Corporate Rules should be permitted for data transfers to the US, at around the end of March or early April.

Further updates will follow as to the details of the EU-US Privacy Shield and alternatives as matters develop.

Contact Details

For more details about the issues in this article or if you would like a data protection policy, which we advise all organisations to have, please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice

Safe Harbor – Shipping Out?

160212 Data TransferSUMMARY: Employers who transfer employees’ personal data to a US office should be aware that they can no longer rely on the Safe Harbor decision to comply with data protection laws.

A recent European ruling means that the Safe Harbor decision is invalid.  Since then, employers have wanted to understand what this means in relation to transferring employees’ personal data; below are some frequently asked questions.

Q1: What is the Safe Harbor decision?

The Safe Harbor decision previously enabled certified organisations to transfer personal data from the EU to the US without breaching European data protection laws.

The Snowden revelations about the US National Security Agency’s surveillance of data held by Safe Harbor participants meant that Safe Harbor’s credibility was seriously undermined.  The revelation indicates that the US is not ensuring an adequate level of protection for personal data.

Subsequently, the European Court of Justice (ECJ) has held that the Safe Harbor arrangement is invalid.

Q2: Does the ECJ’s decision concern our organisation?

Personal data transfers between the EU and the US

If your organisation transfers personal data between the EU and the US it will be of concern; you can no longer rely on the Safe Harbor decision when transferring such data.

The European Commission is attempting to agree a new Safe Harbor package but has not given any time frame for finalising this.

Continuing to transfer data on this basis therefore carries a level of risk.  We suggest ways in which you can manage risk in relation to this at question 3.

Personal data transfers within the EU

If your organisation only transfers personal data within the EU, this decision will not affect you.

Q3: If we cannot rely on the Safe Harbor framework, what are the alternatives?

EU organisations should now consider alternatives to the Safe Harbor when transferring personal data to the US.  These include:

1. Having an employee’s informed express written consent.  Consent may, however, be withdrawn at any time.  Note that it may be considered unfair to make it a contractual requirement for an employee to consent to a transfer of his/her data to the US.

2. Implementing the following:

  • Model contracts – contracts adopted by the European Commission which provide standard wording for the transfer outside the EU; and
  • Binding Corporate Rules – a set of approved internal Codes of Conduct.  The EU’s Article 29 Data Protection Working Party have developed a number of documents to assist.

3. Anonymising or pseudonymising data exported from the EU to the US.

A paper trail should always be kept of any steps taken.

Q4: What are the possible sanctions if we transfer personal data to the US without appropriate alternatives in place?

Legal sanctions in the UK, if the organisation breaches data protection legislation, include:

  • a fine of up to £500,000;
  • the Information Commissioner taking enforcement action against the organisation; and
  • conviction for a criminal offence (which could result in an unlimited fine).

Organisations should also be aware that a breach of the Data Protection Act 1998 is likely to result in damaging adverse publicity and individuals could bring a civil claim against the organisation.

Contact Details

For more details about the issues in this article or if you would like a data protection policy, which we advise all organisations to have, please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

FGWorks February 2016

FGWorks - Feb 16With the latest updates on government actions, bonus schemes and avoidable business risk, we are excited to share the latest edition of our FGWorks newsletter!

Please feel free to forward FGWorks to any of your colleagues and contacts who it may be of benefit to.

Your feedback is always important to us as we continually strive to improve and develop the services we offer. Please send your feedback to: fgmedia@fgsolicitors.co.uk

To view further news updates or for any other information, please visit: www.fgsolicitors.co.uk