Category Archives: ET

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.

Paying for private psychiatric treatment is reasonable adjustment

8080232_mSUMMARY: An Employment Appeal Tribunal confirms that a reasonable adjustment would have been for the employer to pay for psychiatric treatment for an employee

Legal Background

The Equality Act 2010 imposes a duty on employers to make reasonable adjustments to help disabled employees in certain circumstances.   This includes where a disabled person is placed at a substantial disadvantage by an employer’s provision, criterion or practice (PCP).  The PCP in this case was that the employee be able to return to work performing the essential functions of her role.

This case was decided under the Disability Discrimination Act 1995 and the code of practice in force in 2010, but the Equality Act 2010, now in force, is not materially different.

Facts of this case

Mrs B, a reception and finance manager, went off sick with work-related stress and severe depression on 4 May 2010 and never returned to work.

Her employer asked for her to be referred to a private consultant psychiatrist, Dr P, who she saw in August 2010.  Dr P suggested specialist cognitive behavioural therapy and 6 psychiatric sessions at a cost not exceeding £750, saying that there would be no guarantee that she would be able to return to work but he was hopeful that would be the outcome.

The employer asked Dr P further questions, to which he responded in October and then the employer asked more questions.  Before Dr P responded to these further questions, Mrs B resigned on 23 November 2010, stating that the employer had ignored Dr P’s recommendations and claiming disability discrimination (failure to make reasonable adjustments) and unfair constructive dismissal.

The Employment Appeal Tribunal’s (EAT) decision

The EAT upheld the Employment Tribunal’s decision that the employer had failed to make reasonable adjustments by failing to refer Mrs B to private psychiatric services and/or counselling by October 2010 at the latest.

The EAT considered that the reasonable adjustments were job-related because they involved payment for a specific form of support to enable Mrs B to return to work and to cope with the difficulty she had been experiencing at work.

It was not sufficient that the employer had offered Mrs B a different job at a substantially reduced salary.

The EAT also noted that at no time between 19 August and 23 November 2010 did the employer take any steps to resolve with Mrs B her concerns.  Instead, there was effective silence from July 2010.

What does this mean for employers?

Employers should be aware that both mental and physical illnesses can constitute disabilities.  If there is a possibility of a disability and suggestions are made as to how the employee can be helped, even if it is uncertain that the assistance will result in the employee being able to return to work, these should be given serious consideration.

This consideration should include consultation with the employee, who should not be left without communication once they are on long term sick leave.  The employer should have very good reasons for not making suggested reasonable adjustments and should be aware that such adjustments can include paying for private medical treatment, even if this may be available on the NHS.

Case: Croft Vets Ltd v Lynda Butcher (UKEAT/0430/12/LA)

Hazel Robbins, Solicitor

Contact Details

For more details about this case or making reasonable adjustments please contact:

fgmedia@floydgraham.co.uk

+44 (0) 1604 871143

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

Annual Employment Tribunal and Employment Appeal Tribunal Statistics

Summary: Have you ever wanted to know how many claims are accepted by Employment Tribunals (ETs), the largest sums awarded by an ET and what the figures mean for employers? Keep reading to find out… Continue reading