Category Archives: Holiday Pay

Are You Ready For The Changing Face Of Employment?

FG DSC_0545Just a few months into 2017, emerging alternatives to traditional working patterns and arrangements are raising a number of interesting questions about the future direction of employment law.

Employers now operate in an employment arena where short-term contracts are commonplace and temporary positions and
freelance work is the norm!

While this operates to provide greater freedom and flexibility in relation to work for individuals concerns are starting to emerge that for some employers it creates opportunities for exploitation. The legislature and employment law courts now have a critical role to play in ensuring clarity and certainty for employers and individuals alike in avoiding unintended consequences.

Informal ways of engaging workers has existed for decades but arguably, technological advances make it easier for the informal workforce to tap into the mainstream working environment. This has led to concerns about employees within formal work patterns being disenfranchised and experiencing a gradual erosion of rights associated with traditional working arrangements.

Lost in the debate about the evils of non-traditional forms of working is the host of benefits that it can bring. Flexibility is the key argument of supporters. The ability of individuals to work whenever they want has a direct impact on earning income without undermining childcare, family obligations and medical priorities. Employers also benefit by being able to optimise resources while at the same time managing costs.

The legislature and the courts now need to provide confidence to business that where they engage individuals with the intention on both sides that they are genuinely self- employed, they are not subsequently declared workers or employees.

The genuinely self-employed do not have employment rights. Workers, a creation of European law enjoy fewer rights than Employees but are entitled to receive among other things the National Minimum wage and have a right to paid holiday. Workers can also claim for arrears of holiday pay, which can create very onerous financial burdens on businesses in the event that there is a large group of claimants.

There have been the much publicised decisions in the continuing saga of “employee v worker v self-employed” – this saga is set to continue in the light of the Uber decision that a group of 19 Uber drivers were entitled to receive the National Minimum Wage and holiday pay, being appealed. Whether the recently published Employment Status Review will help organisations determine the question is yet to be seen, but commentators have already pointed out that the review is dated December 2015!

Traditionally, organisations have relied on contracts and policies as a means of plotting a safe passage through the thorny landscapes mentioned above. And, whilst any employment lawyer worth their salt will advise that organisations should ensure they have in place up to date and relevant employment documentation (such as contracts and handbooks), is this enough? Very definitely “no”.  Long gone (if ever it was) is the time that organisations could brandish these documents in a “get out of jail free” way.

The Department for Business, Energy and Industrial Strategy has recently issued a statement which included the following “an individual’s employment status is determined by the reality of the working relationship and not the type of contract they have signed. Individuals cannot opt out of the rights they are owed, nor can an employer decide not to afford individuals those rights. Employers cannot simply opt out of the NLW by defining their staff as self-employed.” A sign of things to come?

For assistance with minimising the risk and guidance on proposed engagement agreements you can contact a member of the team at FG Solicitors on 01604 871143.

Should Employers Take The Gender Pay Gap Seriously?

wage-gap-concept-blue-symbolizing-men-red-womenSUMMARY: A failure to address gender pay gaps can create both financial, legal and reputational risk for employers. We answer some frequently asked questions about equal pay.

Do we have to pay men and women the same?

The law provides that men and women should be treated equally when doing “equal work”.  This means men and women must be treated equally in relation to their terms and conditions of employment if they are employed to do:

  • like work. This means work that is the same or broadly similar;
  • work rated as equivalent under a job evaluation study; and
  • work found to be of equal value in terms of effort, skill or decision making.

In order to establish if there is equal treatment or otherwise, there will need to be a comparison of the terms and conditions enjoyed by a member of the opposite sex working for the same employer, doing like work of equal value.

Employers should not forget that the equal pay law protects men too.  Women who are pregnant or on maternity leave have special rights when it comes pay, benefits and bonuses.

Is there any way of defending an equal pay claim?

It is open to an employer to defend a claim if it can show the reason for the difference is due to a genuine factor and is not based on the sex of the employee. Common factors would include a difference in geographical location, experience or qualifications.

Is it just pay that we have to ensure is equal?

The equal pay law covers all aspects of pay and benefits including:

  • basic pay;
  • contractual benefits, i.e., company cars;
  • holiday pay;
  • hours of work;
  • non-discretionary bonus payments;
  • non-monetary benefits;
  • pension benefits and access to pension schemes;
  • performance related pay and benefits, overtime rates and allowances; and
  • sick pay.

The following areas would not be covered by the equal pay law but could be challenged under the sex discrimination law:

  • discretionary bonus payments;
  • discretionary pay increases;
  • promotion; and
  • the terms of a job offer.

To avoid the risk of equal pay claims we are considering banning staff from talking about how much they get paid?

Whilst employers are able to impose some restrictions on their staff about discussions concerning pay, any ban on this type of discussion would be unenforceable, if the purpose of the discussion is to identify if there is unlawful pay discrimination. This means a gagging clause in a contract of employment will not be effective if its aim is to prevent this type of discussion.

Any disadvantage including dismissal suffered by the employee as a consequence of their disclosure about pay for the purpose referred to above will be unlawful victimisation.

Do we have to respond to a request from a member of staff asking for information about pay differences?

A person who thinks they may have an equal pay claim may submit questions to the employer to help them determine whether they have such a claim.    An employer is not legally obliged to respond.  Before making the decision not to respond, an employer needs to be aware that an employment tribunal can take into account any response, or lack of response as a contributing factor when considering the issue of discrimination.

An employer faced with a request for information will need to consider carefully the nature of any response it chooses to provide and any decision not to respond. In any event, if legal proceedings are commenced the employment tribunal may order the information to be provided.

Acas has provided guidance on the question and answer process – Asking and responding to questions of discrimination in the workplace.

Should we be aware of any additional legal requirements?

It is expected from October 2016 private and voluntary sector organisations with more the 250 employees will be required to publish information about the pay differences between men and women. The first reports will have to be published by April 2018.

These requirements do not apply to the public sector.

If we lost an equal pay claim, what are the sanctions?

Any claim by an employee can be brought during their employment or no later than six months after their employment has ended.  Any individual wishing to issue a claim would have to contact Acas to consider conciliation.

A successful employee would be entitled to:

  • a declaration that their rights have been breached;
  • payment of any arrears (in the case of pay); or
  • damages (in the case of a non-pay contractual term).

In most cases arrears of pay can go back up to six years before the date the claim was brought.

Any employer who loses any case in the employment tribunal can now be ordered to pay a financial penalty of between £100 and £5,000, which is payable to the government.

In some cases, a losing employer will be required to carry out an equal pay audit and publish its findings supported by a plan to avoid breaches occurring or continuing. The penalty for failing to carry out the audit is up to £5,000.

Contact Details

If you would like more information on good equal pay practices with a view to engaging with your workforce and to minimise the risk of claims, 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.

Settlement Agreements – A Perfect Ending!

160519 Settlement AgreementSUMMARY: Learn more about settlement agreements with the answers to some of the most frequently asked questions.  

Q: When can we use a settlement agreement?

A:   Settlement agreements are often used to resolve workplace disputes, and to give the employer the certainty that once the agreement is signed there will be no subsequent employment tribunal claim from a disgruntled employee.  More often than not, the employment relationship will have broken down. The focus then is usually on avoiding unfair dismissal and discrimination claims. A whole raft of statutory employment rights and breach of contract claims can also be compromised.

There does not necessarily need to be a dispute as settlement agreements can be used in a variety of other circumstances where the employment will end.  For example, where there are performance or ill health issues, a voluntary exit or a restructure.

Settlement agreements are not however always about the employment relationship ending, as they can be used at any time during the employment relationship to resolve workplace disputes. For example, if there has been a complaint about how holiday pay has been calculated.

We would recommend that where a settlement agreement is being contemplated, legal advice is taken before any discussions take place with the employee so that any legal risks are identified and then can be properly managed.

Q: What are the benefits of using a settlement agreement?

A:  A settlement agreement allows an employer to manage legal, commercial and reputational risks all in one go in the knowledge that there will be no tribunal claim.  Significant management time, stress and expense can be saved.

Terms can also be agreed on issues that a tribunal would be unable to address. For example, the offer of a positive reference; or the introduction of post termination restrictions, where the existing contract is silent on the employee’s activities once they have left.

Settlement can also keep a dispute out of the public eye and be subject to strict confidentiality provisions.

These benefits need to be balanced with the fact the employee will want something in return, no matter how at fault they may be. Money is usually the main consideration but the circumstances may dictate an entirely different exit package.  There are also restrictions on an employer’s ability to compromise personal injury and accrued pension rights claims.

Q: Are there any essential requirements which need to be complied with to make the deal binding?

A: The following are essential to ensure that the employee is not able to bring an employment tribunal claim:

  • The settlement agreement must:
    – be in writing;
    – identify the complaints to be compromised; and
    – state that it satisfies certain legal requirements.
  • The employee must also have received independent legal advice.

A poorly drafted agreement or one which has been incorrectly signed may leave the door open for an employee to bring a tribunal claim, even if they have already been paid a sum of money.

Q: How long should we give an employee to consider a settlement agreement?

A: An employee should generally have at least 10 days to consider the settlement agreement and obtain legal advice. A shorter period could lead to allegations of undue pressure, permitting reference to the settlement offer in a subsequent tribunal claim, if settlement is not reached.

If there is a commercial imperative requiring a shorter period, legal advice should be taken.

Q: Do we have to pay for the employee’s legal advice?

A: An employer is not obliged to pay the employee’s legal costs.  To get the job done, an employer will often choose to make a contribution.  A good starting point is £250 plus VAT. The following factors may demand a higher contribution: locality, seniority of the employee and the complexity of the case.

Q: Can we recycle a settlement agreement used in the past for a different employee?

A: We would caution against recycling for two reasons:

  • Each employee’s circumstances are different; and these circumstances need to be taken into account in the agreement. A one size fits all approach will not provide the employer with the best possible protection; and may give no protection at all.
  • Any changes to the law may require amendments being made to the agreement.

Contact Details

If you would like to explore whether a settlement agreement may be the best option for your business where you have a workplace problem – 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.

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.

On The 1st Day of Christmas…

1st Day of ChristmasSUMMARY: In our series “The 12 Days of Christmas”, which will be posted in the run up to Christmas, we provide guidance on some of the common challenges employers face during the Christmas period.

On the 1st day of Christmas my employee said to me…“I’m not well and have holiday booked but I don’t want to lose it, can an exception be made to the use it or lose it policy?” 

Increased absence levels coupled with the fact many employees are trying to take their last few days’ annual leave, present employers with the above conundrum. In the past, the answer to the employee’s question was likely to be “no”. Times have changed and the following factors need to be considered before responding:

  • Under the Working Time Regulations 1998 (“WTR”) ordinarily statutory annual leave may only be taken in the leave year in respect of which it is due.
  • Whilst it is open for an employer to have a “use it or lose it” policy, where an employee’s statutory annual leave (4 weeks) coincides however with a period of sickness incapacity, the employee must have the option of switching their holiday to another time; even if the leave falls after the end of the relevant holiday year. Current case law indicates that 18 months following the end of the relevant leave year should be regarded as the cut-off for the purposes of carry over.

Two additional considerations for employers are as follows: firstly, when calculating holiday pay, employers should not forget to ensure that any holiday pay is calculated correctly. For example, are the relevant overtime payments being properly accounted for? And secondly, employers should not forget that they will also need to consider the right of carry over in the context of family friendly leave.

Contact Details

For more details about the issues in this article 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.

FGazette April 2015

FGazette April 2015

Welcome the latest edition of the FGazette – we wish you a Happy Easter!

This latest edition of the FGazette is packed with key employment law updates and includes issues such as eliminating tribunal claims worry, considering whether individuals are employed or self-employed as well as performance management in the workplace.

Click on the image to read and please forward the FGazette to any of your colleagues and contacts to whom you feel it may be of benefit.

If you have any problems viewing this link, please contact us on 01604 871143 or fgmedia@fgsolicitors.co.uk

Holiday Pay Seminar: 5 February – FAQs

Holiday Pay Seminar – FAQs

Holiday Planning

Q: I pay a car allowance of £500 a month on top of a salary of £2,000 a month to my employees.  Do I have to take the car allowance into account when calculating holiday pay? 

A: You would carry on paying the car allowance while the employee is on holiday as this is a normal contractual benefit. However, you would not take it into account twice when calculating the holiday; you would continue to pay £2,500 per month as you are already paying the allowance.

Q: We have an employee who is off on long term sick leave and living in Poland.  How can we manage this absence? 

A: You should try to keep in contact with the employee as much as possible. You should ask them for a fit note/medical certificate from a Polish medical professional and if necessary get it translated. These should be kept up to date. If they are unable to travel back to the UK for absence reviews, you should consider conducting these over the telephone or in writing. Please be aware that a fit note from a doctor outside the UK is evidence of the employee’s ill health. HMRC may arrange translations into English where you disagree with your employee on their SSP entitlement.

If unsure, you should take advice.

Q: We ask employees to reserve 3 days of their annual leave for the Christmas shutdown.  One employee put in a fit note the day before their annual leave, covering them for this period.  Do they have the right to take this annual leave at another time?

A: They may do. It depends upon your policies, how much holiday they are entitled to and when the holiday year starts and ends.  If they are only entitled to statutory holiday pay (28 days including bank holidays) then they are more likely to be entitled to take it at another time. If:

  1. they are entitled to contractual holiday (for example they are entitled to 31 days per year); and
  2. these 3 days are the last of the holiday year, which ends at the end of December and as such fall outside the statutory entitlement; then, depending upon your policies, there may be an argument that they are not entitled to take this holiday at another time.

Q: Is the law in force now in relation to taking into account overtime when calculating holiday pay?

A: Yes, it is in force. The case law is an interpretation of European legislation and UK regulations which were already in force.

Q: You said that there should be regulations coming into force in July 2015 in relation to limiting the amount of time employees can go back to claim unlawful deductions from wages (a backstop period).  Will this be retrospective and therefore get rid of any historical liability?

A: The new backstop period will apply to claims presented on or after 1 July 2015. The current law will apply to claims brought before this date.

Q: I am confused about what types of overtime should be taken into account when calculating holiday pay.  Can you help?

A: Please see the table below which sets out guidance for which types of overtime should be taken into account in the holiday pay calculation.

Type of Overtime Description Include?
Compulsory/ Guaranteed • Must be worked
• Regularly required
YES
5.6 weeks
Non-guaranteed • Regularly required
• Cannot be unreasonably refused
YES
4 weeks
Voluntary • Regularly worked YES – ?
Review all circumstances
Voluntary • Occasional
• Irregular
NO

Holiday Pay Update Seminar – February 2015

Holiday PlanningHoliday Hell or Holiday Heaven… What’s Your Strategy?

Date: Thursday 5th February 2015

Time: 8:00-10:00am              Cost: Free

Venue: FG Solicitors Offices, 2 Deanery Court, Grange Farm, Preston Deanery, Northampton, NN7 2DT

Holiday pay has become a legal minefield for employers.

  • Are you unsure about your legal obligations?
  • Have you figured out whether you need to take into account overtime, bonus and commission payments?
  • What happens during periods of sick leave?
  • Have you calculated what an increase in the holiday pay bill could mean for your bottom line?

Whilst no two businesses are the same, we understand at FG Solicitors that you will all have common goals:

  • Accurately assessing the problem
  • Introducing the right strategy for the business

A clear strategy avoids holiday hell. Join us to identify solutions relevant to your business!

To book your place at our seminar, please contact us using the details below:

info@fgsolicitors.co.uk

+44 (0) 808 172 93 22

We look forward to seeing you at our next seminar.

If you feel this seminar would benefit other colleagues or companies please feel free to forward the details on.