Thursday, 6 August 2015

EMPLOYMENT RESOURCES for Trustees who manage paid workers

Recent decisions in the European court of justice and UK courts have led to some confusion around the calculation of holiday pay.

  • if a worker has normal working hours (a specified number of hours per week), holiday pay is based on the remuneration for those hours (Working Time Regulations 1998);
  • if a worker does not have fixed hours, holiday pay is based on average pay for the 12 weeks preceding the holiday (Working Time Regulations 1998) — although recent decisions have indicated that in some cases 12 weeks may not be the appropriate period;
  • pay for guaranteed overtime, which the employer is contractually obliged to provide and the worker is obliged to do, must be included when calculating holiday pay (a court of appeal case in 2004);
  • pay for non-guaranteed paid overtime, which the employer is not obliged to offer but the worker is contractually obliged to do it if it is offered, must be included when calculating holiday pay if it is sufficiently regular (Bear Scotland v Fulton, employment appeal tribunal 2014);
  • pay for voluntary overtime, which the employer is not obliged to offer and the worker is not obliged to do if it is offered, probably needs to be included if it is sufficiently regular, but at the moment the only court decision is in Northern Ireland and does not apply to the rest of the UK (Patterson v Castlereagh Borough Council, NI court of appeal 2015);
  • variable payments only need to be included in the calculation if there is some element of permanence or regularity — so occasional overtime pay or an annual bonus (chance would be a fine thing, in most of the voluntary sector) would not need to be included in the calculation, and regular overtime or commission would need to be, but there is no clarity yet about how regular or frequent the variable payments would need to be in order to form part of normal remuneration, and ultimately it will depend on each particular situation;
  • the additional payments do not need to be included in holiday pay for the eight additional days of statutory annual leave under the working time regulations, or for any days of contractual annual leave;
  • a claim for underpaid holiday pay must be brought within three months from the underpayment, and where the claim is for a series of underpayments, any gap of more than three months between underpayments breaks the series (Bear Scotland v Fulton);
  • for claims on or after 1 July 2015, any claim for a series of underpayments cannot go back more than two years (Deduction from Wages (Limitation) Regulations 2014).

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