Category Archives: Entitlement

Apprenticeships – Make Them Work For You!

79035611 - teacher with students in metallurgy workshop

SUMMARY: With the Government championing apprenticeships in the UK, the uptake of these working arrangements by employers is at an all-time high.  The pitfalls however of getting the arrangement wrong can prove extremely costly.  These can be avoided very easily by following a few simple do’s and don’ts.

DON’T use an ordinary contract of employment.

Using an ordinary contract of employment for an apprentice makes it much harder and far more costly for an employer to terminate the agreement.  Apprentices should sign an appropriate apprenticeship agreement which sets out the terms of their engagement.

DO be aware of the minimum durations for apprenticeship agreements.

From 1 August 2012, the minimum duration for apprenticeships for 16 to 18 year olds is 12 months.  For apprentices aged 19 and above, apprenticeships must last between one and four years, unless prior learning or attainment has been undertaken.

DON’T get caught out by the National Minimum Wage Act.

The apprenticeship rate, which was introduced in 2010, applies only if the correct agreement is in place and the apprentice is in their first year of apprenticeship or is under 19 years of age.  In all other instances, apprentices will be entitled to either the development or adult rate.

DO be aware of young workers’ rights under the Working Time Regulations.

Apprentices under the age of 18, but over compulsory school age, have additional working time rights. These rights include stringent daily and weekly limits, and greater rest break entitlements.

A child ceases to be of compulsory school age on the last Friday in June in the academic year in which he/she reaches the age of 16 or if he/she reaches 16 after the last Friday in June, but before the start of the new school year.

Get it right and apprenticeships can play a vital role in the long term development of your workforce as well as contributing to enhanced productivity.

Contact Details

For more details about apprenticeships 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.

Working out holiday pay

holiday-calculationsSUMMARY: With holiday season upon us we have produced a FAQs fact sheet to help you calculate the holiday entitlements of your workers.

What holiday entitlement do my workers benefit from?

Your first point of reference is the contract you have with your worker as this should specify that holiday to which they are entitled (which is a legal requirement for employees) – this is known as their contractual holiday entitlement. Provided their contractual holiday entitlement is equal to, or more than, their statutory holiday entitlement this is their holiday entitlement. If their statutory holiday entitlement is greater than their contractual holiday entitlement, their statutory holiday entitlement prevails.

What is the statutory holiday entitlement?

Holiday entitlement under EU law and UK law is known as statutory holiday entitlement. The table below identifies these entitlements for a full time worker – a part-time workers’ holiday entitlement is calculated on a pro-rata basis.

Source entitlement comes from Amount of holiday entitled to
EU law (Working Time Directive) 4 weeks (20 days)
UK law (Working Time Regulations) 5.6 weeks (28 days) including the 4 weeks provided for by EU law *

*This includes the eight statutory bank holidays.

Will Brexit affect the application of EU Law?

Currently there is no affect and it is generally predicted that, once we exit, the status quo regarding much EU derived employment law will be maintained. This is with the exception of holiday entitlements, in particular, in relation to including overtime and other payments when calculating holiday pay (see below), and holiday rights for those on long-term sick leave. We will provide updates when there is further information about these possible changes.

Do I need to include overtime payments with holiday pay?

This is dependent on whether the worker has normal working hours. Again, the first point of reference is the contract as this should make reference to working hours and whether that worker has normal working hours – for example, 9am to 5pm Monday to Friday.

For those with normal working hours the table below summarises whether paid overtime should be taken into account in the holiday calculation in relation to statutory holiday entitlement – contractual holiday entitlement may be different.

Type of Overtime Description Include in holiday pay calculation?
Compulsory and guaranteed
  • Must be worked
  • Regularly required
YES for 5.6 weeks
Compulsory and non-guaranteed
  • Regularly required
  • Cannot be unreasonably refused
YES for 4 weeks
Voluntary
  • Regularly worked
PROBABLY YES – 4 weeks*
Voluntary
  • Occasional
  • Irregular
PROBABLY NO*

*In every case where overtime is voluntary, whether or not it should be included in the holiday pay calculation, will depend on all the circumstances as it is necessary for employers to consider whether the payments are related to the performance of the worker’s duties.  Legal advice should be sought on a case specific basis.

Those who do not work normal hours should be paid an average of their remuneration over the previous 12 weeks – this will include overtime (of any type) as well as commission, bonuses and other payments. This is with the exception for those who have zero-hours contracts – in this instance some weeks are disregarded when calculating their 12 week average pay.

Is it just overtime payments that need to be taken into account when calculating holiday pay for workers with normal working hours?

No, any payments that are related to the performance of a worker’s duties should be taken into account in relation to the 4 weeks’ holiday (that holiday entitlement derives from EU law – see above). Such payments might include:

  • bonuses based on performance;
  • commission;
  • call-out supplements; and
  • anti-social hours allowances.

Payments which do not usually need to be taken into account include:

  • benefits in kind;
  • bonuses not linked to workers’ performance; and
  • expenses (including travel expenses) which reimburse workers for costs incurred.

How do I calculate the overtime or other payment which I need to include in the holiday pay of workers with normal working hours?

One approach to calculating the holiday pay of a worker with normal working hours is taking the average remuneration received by the worker in the 12 weeks prior to their holiday, in the same way as you would for a worker who does not have normal working hours.

The difficulty associated with this approach is the impact annual performance related bonuses may have on the calculation. Unsurprisingly there is a raft of case law on this area of law and the correct approach for this calculation will be dependent on the circumstances of each case. It is therefore advisable to seek legal advice on a case specific basis.

Contact Details

If you would like more information on holiday entitlements and 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.

Carrying over holiday entitlement when on sick leave – how much and when?

HolidaysSUMMARY: In the recent case of Plumb v Duncan Print Group Ltd UKEAT/2015/0071, the EAT dealt with the issue of a sick worker’s right to carry over holiday entitlement.

Holiday is a hot topic for employers – recent decisions on holiday pay have led many employers to re-think how overtime could be taken into account in such payments.

However, an equally vexing problem which employers need to solve is how to deal with the holiday entitlement of those workers who are on sick leave. The EAT considered this in the recent case of Plumb v Duncan Print Group Limited.

Background

As a reminder, there are the following important principles to take into account when considering a sick worker’s entitlement to annual leave:

  1. Workers are generally only entitled to take annual leave in the leave year in respect of which it is due. For example, if the leave year is between January and December, an employee must take all of their annual leave entitlement by the end of December.
  1. An exception to the principle in point 1 is that annual leave may be carried over where the worker was unable or unwilling to take annual leave because he was on sick leave and as a consequence did not exercise his right to annual leave. The worker does not have to have made a request for annual leave in order to carry it over.
  1. On termination of employment, if the worker is entitled to annual leave in respect of any previous leave year which was carried over because of sick leave, the employer should pay the worker in lieu of that annual leave.

When considering carrying over annual leave, we are only referring to carrying over the 4 weeks of annual leave that a worker is entitled to under the (European) Working Time Directive, not the additional 1.6 weeks that a worker is entitled to under the (British) Working Time Regulations or any additional contractual annual leave.

Where clarity was required

There were 2 areas which needed clarity:

  1. How far back should a payment in lieu of holiday go on the employment ending?

In relation to point 3 above, it is clear that a worker should be paid in lieu for holiday they were unable to take because of sick leave.  What was not clear before this case, was how far back a worker could claim holiday for.  To take an extreme example, if they had been off sick for 5 years and had not taken any holiday, if their employment was terminated in the sixth year, could they claim a payment in lieu of all the 5 years of holiday they had been unable to take?

  1. Should a worker unwilling but able to take annual leave be entitled to carry over holiday?

Another point which required clarity was whether a worker who was unwilling to take annual leave during sick leave should be permitted to carry it over, even if he would have been physically able to take the annual leave during the sick leave period, had he chosen to do so.

Facts of the case

Mr P (the employee) was on sick leave between 26 April 2010 and 10 February 2014, when his employment terminated.  Mr P did not take or request any holiday until summer 2013 when he requested permission to take all of his accrued holiday from 2010 onwards.  The employer agreed to pay for accrued holiday for the current leave year (2013/2014) but refused to pay for untaken holiday for the previous 3 leave years.  The leave year ran from 1 February to 31 January.

Mr P brought a claim for payment in lieu of untaken leave for the 2010/2011, 2011/2012 and 2012/2013 leave years. The employment tribunal dismissed his claim and he appealed to the EAT (Employment Appeal Tribunal).

Decision

The EAT allowed Mr P’s appeal in respect of accrued leave for the 2012/2013 holiday year (i.e. he would be entitled to a payment in respect of these years), but dismissed his appeal in respect of accrued leave for the previous two holiday years.

The EAT made it clear that:

  • Sick workers can carry over untaken holiday leave for 18 months after the end of the leave year.
  • Sick workers are not required to demonstrate that they are unable to take their holiday.  They can choose not to take holiday during sick leave.

What does this mean for employers?

  • Employers now have more clarity on how much annual leave an employee can carry over from previous years.  Taking the example given earlier, an employee on the termination of their employment would not be entitled to payment in lieu of annual leave for the entire 5 years they had been off sick.  They could only carry over untaken holiday leave for 18 months after the end of the leave year and on termination would be entitled to a payment in lieu of this holiday.  A practical example of this would be:
    • The leave year runs between 1 January and 31 December.
    • Mr A has a full time contract and is off sick from 1 January 2010 until his dismissal on 1 January 2015.
    • Mr A has not taken any annual leave in this 5 year time period and his contract of employment does not state anything about carrying over annual leave.
    • Mr A would be entitled to a payment in lieu of 8 weeks annual leave on the termination of his employment.  This relates to the annual leave for the leave year ending 31 December 2013 and for the leave year ending 31 December 2014.
  • Employers should check their contracts of employment in relation to the carry-over of holiday entitlement.  If employers allow more carry-over of annual leave than is necessary, employers may want to amend these contracts.  Contracts should also not set out that carry-over of annual leave is never permitted.
  • Employers should permit workers to carry over untaken annual leave while they are on sick leave even if they consider that workers would have been able to take this annual leave had they chosen to do so. Whether to take annual leave during sick leave is a decision for the worker and they are entitled to choose not to take the annual leave even if they would have had the ability to take it.  They are also not required to request the annual leave if they wish to carry it over.

Cases

Plumb v Duncan Print Group Ltd UKEAT/2015/0071

Contact Details

For more details about holiday leave entitlement and its interaction with sick leave please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

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