Covert Recordings of Meetings

Posted by: on Jul 11, 2019 | No Comments

With the majority of people carrying mobile phones which are capable of making recordings, it is not surprising that employers have seen an increase in employees covertly recording work meetings. Many times in the past we have been asked by our clients “what can we do about it?”. Historically, our dejected response has been “not a lot”. Well…not anymore!

 

A case handed down this month in the Employment Appeal Tribunal (Phoenix House Limited v Stockman) has confirmed that both an employee and an employer should say if there is any intention to record a meeting except in the most pressing of circumstances, and (on the employee’s part), it will generally amount to misconduct not to do so. It follows that it is therefore permissible to discipline an employee for making a covert recording at work.

 
The level of disciplinary sanction very much depends on the facts. The Employment Appeal Tribunal was keen to emphasise that, contrary to what was argued in the case before it, covert recording of meetings does not automatically amount to gross misconduct (which can result in dismissal without notice). Rather, in determining what level of misconduct has occurred, employers must consider:

1. The purpose of the recording

Was it to entrap the employer or gain a dishonest advantage? Or was it merely to keep a record, ensure that the employee was not being misrepresented, or to take advice?

2. Blame

Was the employee told specifically not to make a recording, or did they lie about making a recording? Or was it more innocent and the employee simply did not think about the fact that making a recording would not be appropriate?

3. Type of meeting recorded

Was it a meeting that would usually be minuted in some way, and a record shared, such as a disciplinary or grievance meeting? Or was it a meeting at which highly confidential, or personal information was discussed?

 
All of those factors are relevant in determining what sanction an employer can impose. Clearly an employee who records a meeting concerning highly confidential business information in order to try and trick the employer, and then lies about it, can justifiably receive a much harsher sanction than an employee who just wanted a record of the meeting, and did not think there would be an issue in taking a recording. As with everything in employment law, each case depends on its facts. Of course if you do wish to take disciplinary action for covert recording of meetings then you will need to follow a full disciplinary process, which we can assist you with.

 
The key action point for employers here is to review and update your policies. If you do not want your meetings recorded (and our advice is that it should be your general policy that meetings are not recorded by either party), that should be set out in your policies – disciplinary, grievance, bullying and harassment, performance management, and any other policies which envisage meetings being held. Equally, you should update your “misconduct list” in your disciplinary policy to set out that recording meetings covertly is considered to be misconduct, or, in some cases, gross misconduct.

 
It is also important to note, even if you do have policies in place, and the employee has acted sneakily in making their recording (etc. etc.), those recordings are still disclosable in an Employment Tribunal. So, whilst you may now be able to discipline employees for making recordings, they can still use those recordings against you… so please please please watch what you say.

 

All in all though, a welcome development for many employers…happy disciplining!

 
Note: The content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any particular circumstance. If you would like more information on the content of this article, please call the Employmentor Team on 01603 281139.

Holiday Pay Updates – Voluntary Overtime

Posted by: on Jun 11, 2019 | No Comments

Good news – yet another court decision on how to calculate holiday pay!

The Court of Appeal confirmed yesterday, in the case of East of England Ambulance Service NHS Trust v Flowers, that yes, voluntary overtime should be taken into account when calculating holiday pay, thus confirming an earlier Employment Appeal Tribunal decision which we updated you on back in August 2017.

Specifically, the Court of Appeal ruled that where overtime is “sufficiently regular and settled for payments made in respect of it to amount to normal remuneration”, it is irrelevant whether or not the overtime is compulsory or voluntary; it must count towards the calculation of holiday pay.

The law for now

For now, this means that we do have confirmation, from the Court of Appeal, that holiday pay should include a calculation that factors in:

  • Overtime of any sort (whether voluntary, compulsory, guaranteed or not) as long as it is broadly regular and predictable;
  • Commission payments;
  • Shift allowances;
  • Stand by payments;
  • Call out payments; and
  • Any travel payments which are treated as taxable remuneration (as opposed to reimbursement of expenses).

The jury is still out on bonuses, but it seems as though productivity and attendance linked bonuses that form part of “normal remuneration” will likely count towards a holiday pay calculation, whereas more discretionary bonuses such as those based on company performance will not form part of holiday pay.

We are also still unclear, at least for now, on how holiday pay should actually be calculated in practice, specifically whether it should be with reference to pay during the preceding 12 weeks, 12 months, or somewhere between the two.

Future changes – 2020

Fortunately, it is hoped that the end (or at least the beginning of the end!) may well be in sight. Planned changes to the law in April next year, as part of the Good Work Plan, include a commitment from the government to legislate to confirm a 52 week reference period for calculating holiday pay (rather than the current 12 week period), giving employers much needed clarity in this area of law.

Practical Steps

For now, legally speaking, all workers who take holiday should, for the first 20 days of their holiday (as these changes only apply to the first 4 out of the 5.6 weeks statutory entitlement), receive a payment which includes all the elements listed above.

However, given the fact that the applicable reference period, at least until April 2020, is still unclear, and given that even after April 2020, there may be different approaches for different types of worker, this area of law remains a tricky one, and employers who are at all unsure should contact the Employmentor Team, so that we can advise on the most appropriate way for your business to plan for the changes next year, and beyond.

Indeed, given that the changes in April 2020 will apply retrospectively (in that they will require a calculation to be carried out on the basis of the previous 52 weeks) we would urge businesses to start to think now about assessing their workforce and how they are paid during annual leave, so as to ensure not only that compliance next year is practicable, but also to be more confident on staffing costs and budgeting moving forward.

 

It is also worth noting that a further change is afoot in terms of holiday for 2020, and that is the change to the early May Bank Holiday, which will move to a Friday (8 May 2020) as part of the commemorative events to mark the 75th anniversary of VE day.

 

If you would like to speak with any member of the Employmentor Team to chat through your options with regards to any of the above, please call 01603 281139 to arrange that.

Note: The content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any particular circumstance.

Employment Law Changes: April 2019

Posted by: on Apr 1, 2019 | No Comments

As ever in April, there are a number of key changes which come into force today and this week. By way of reminder these are:

National Minimum Wage – 1 April 2019

As from today, the National Minimum Wage rates are:

  • for those aged 25 and over, £8.21 (increase from £7.83);
  • for those aged 21 to 24, £7.70 (increase from £7.38);
  • for those aged 18 to 20, £6.15 (increase from £5.90);
  • for those under 18, £4.35 (increase from £4.20); and
  • for those who are apprentices, £3.90 (increase from £3.70).

Statutory payments – 6/7 April 2019

From 6 April 2019, statutory sick pay is increasing from £92.05 per week to £94.25.

From 7 April 2019, the level of statutory maternity, adoption, paternity and shared parental pay is also increasing, from £145.18 per week to £148.68.

Tribunal awards – 6 April 2019

From 6 April 2019, the limit for a weeks’ pay will increase from £508 to £525. This figure is used to calculate statutory redundancy pay and the basic award in unfair dismissal claims.

The maximum compensatory award for ordinary unfair dismissal in the Employment Tribunal will also increase from £83,682 to £86,444.

Itemised payslips – 6 April 2019

From 6 April 2019, all workers (as well as employees) are entitled to itemised payslips. Further, payslips must now set out the number of hours paid for where a worker is paid on an hourly rate basis.

 

Whilst these may only seem like small changes, they are not ones to miss as the consequences of failing to follow these changes can have a big impact on employers.

Please be aware that reliance should not be placed on this information in substitution for taking legal advice specific to your circumstances. If you have any questions on any of these changes, please do contact a member of the Employment Team via 01603 281139/ email hidden; JavaScript is required.

 

Issuing Contracts of Employment

Posted by: on Feb 18, 2019 | No Comments

The New Year marks an opportunity to make resolutions for how to be better employers, but as January 1st becomes a distant memory, and the majority of resolutions have fallen by the wayside, a recent case reminds employers of the importance of issuing contracts of employment to new staff, and provides helpful guidance as to when this process should be completed.

Most employers are familiar with their obligations in relation to issuing a “written statement of particulars of employment” containing specific details, including the start date, the rate of pay, the place of work, and the notice arrangements, when a new employee starts employment (usually in the form of a contract of employment).

More experienced HR practitioners may also be aware that the law provides that such a statement must be issued no later than two months after the start of employment, but is not required for employees with less than one months’ continuous service, and that failure to provide a statement can attract compensation if pursued with other employment tribunal claims, of between two to four weeks’ pay.

A recent case involving employees with very short service has muddied the waters on this a little, as the Employment Appeal Tribunal (EAT) has confirmed that an employee with six weeks’ continuous service should have been issued with a written statement of employment particulars, and was therefore entitled to compensation where her employer failed to do so.

The EAT suggested that whilst the law confirms that an employer has up to two months to issue a written statement of employment particulars (and is not required to do so for the first one month of employment), an employee can still seek compensation for not having a written statement of employment particulars if they are employed for between one and two months. Confused? So were we!

The upshot is that employers should now ensure that all employees who have over one months’ continuous service are issued with a written statement of employment particulars – in other words, a contract of employment. That also reflects good practice, to ensure that at least the key terms are set out in writing, to avoid any confusion or dispute.

In any case, from 6 April 2020 and the launch of the Government’s “Good Work Plan”, all employees and, for the first time, workers, will be entitled to a detailed written statement of terms from the very first day they commence work.

So, the moral of the story here is to make sure you have detailed contracts of employment, and that those are issued to employees (for now) in a timely manner (and, from next year, from their first day of employment).

If you need any assistance in relation to preparing contracts of employment, or would like us to review your existing contracts, please do contact a member of the Employment Team via 01603 281139 or email hidden; JavaScript is required.

Reminder: Rest Breaks

Posted by: on Jan 23, 2018 | No Comments

Tribunal confirms that workers must receive an uninterrupted break of no less than 20 minutes where they work for six hours or longer.

As we are sure you are aware, the law states that most workers who work for over six hours are entitled to a 20 minute uninterrupted rest break. It is not acceptable, for example, to give two 10 minute breaks totalling 20 minutes.

In certain industries (such as rail and security) those breaks are interrupted. A security guard who ignores a robber attempting to crack the bank’s safe is unlikely to absolve him or herself by saying “Sorry boss, I was on my break!” In these circumstances, where an employee has been prevented from taking their full 20 minutes, an employer must give the employee another rest break, known as ‘compensatory rest’.

Recently the Employment Appeal Tribunal (EAT) was called upon to examine what exactly was meant by compensatory rest. Mr Crawley worked in single-manned signal boxes for Network Rail. Whilst signal box operatives are not constantly busy, they are required to continuously monitor and may be required to take steps to ensure the train network operates smoothly and safely. Whilst Mr Crawley was able to take numerous breaks throughout the day (which cumulatively amounted to over 20 minutes), there was no individual 20 minute long break. Mr Crawley said he had not had his 20 minute rest break, and sued Network Rail.

The EAT agreed with Mr Crawley and held that his rest must be an uninterrupted period of 20 minutes. A combination of shorter breaks is not allowed.

What does this mean?

This case is a reminder that employees must have a full uninterrupted 20 minute break. In the event that an employee’s 20 minute break is interrupted, technically they must be given another full 20 minute break. Where an employee is not allowed to take this break, they may in theory bring a claim.

Where a complaint is upheld, the Employment Tribunal will make a declaration that the working time regulations have been breached, and may award damages where the worker has suffered a loss. A public declaration that an employer has breached the Working Time Regulations will undoubtedly cause reputational damage, and may put off customers and potential candidates alike.

Where a lack of breaks makes working practices unsafe, local councils or the Health and Safety Executive can issue enforcement notices, or even bring criminal charges against the worst offenders.

What should I do?

Don’t panic; the likelihood of an employee bringing a claim because of one 18 minute rest break is fairly low (unless you have particularly litigious employees).

Firstly, review your break policy and record keeping practices to ensure that:

  1. all employees are entitled to a full 20 minute break; and
  2. where these breaks are interrupted, there is scope for employees to take a full 20 minute break later.

Employees should be allowed to take a break of at least 20 minutes (and remember these breaks can be unpaid). You may also consider ways in which you can record the lengths of breaks employees are taking (e.g. clocking in and out, timesheets and/or time recording).

You should also remember that 20 minutes is an absolute minimum; a modern employer should allow further breaks where the health and safety of their employees requires it. This may be the case for employees working particularly long shifts.

What are the benefits?

Having adequate breaks helps employees to be productive, safe and happy at work. It also lowers the risk of a claim being made against you and the potential of a damaging working time declaration.

If you have any questions about rest breaks or the Working Time Regulations in general please contact a member of our Employmentor team on 01603 281139 or email hidden; JavaScript is required.

Note: the content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any specific circumstance.

Are your employment contracts GDPR ready?

Posted by: on Dec 11, 2017 | No Comments

Even before Uber made the headlines (for all the wrong reasons) by covering up a massive data breach, the imminent introduction of the General Data Protection Regulation (GDPR) has made data protection a hot topic.

Sexual Harassment: Flirting with Disaster

Posted by: on Nov 10, 2017 | No Comments

Following the series of allegations made against public figures over recent weeks, including actor Kevin Spacey and producer Harvey Weinstein, the topic of sexual harassment is a major national talking point. Whilst the media have focussed on allegations made against public figures, these issues can and do affect the workplace. It is also possible that staff, empowered by recent events and the #metoo social media campaign will begin to come forward with their own allegations and concerns.

As a modern employer you can, and should, take steps to ensure your workplace is a safe and welcoming environment for all of your staff and that any allegation of harassment is handled appropriately. Whether or not a complaint is well-founded, how the matter is handled (both in relation to the accuser and the accused) is key in workplace relationships and the protection of your business and its reputation.

What is sexual harassment?

Having a clear idea of what is (and what is not) sexual harassment is key to protecting your employees and your business. Unfortunately it is impossible to say in the abstract what will amount to sexual harassment and it would be equally unhelpful to trot out a legal definition, as there are some acts which, whilst legal, would be completely unacceptable in the workplace. In broad terms, sexual harassment involves unwanted conduct of a sexual nature.

This debate usually circles back to the ‘hand-on-the-knee’ which landed the former Defence Secretary Sir Michael Fallon in hot water last week. As a rule of thumb, where conduct is sexual in the workplace this should set off alarm bells and a starting point should be that that conduct is not appropriate. Where the complainant alleges that the ‘hand-on-the-knee’, whilst maybe not sexual, was not wanted, a modern employer may wish to treat such allegation as one of sexual harassment.

It is also worth remembering that sexual harassment does not necessarily require any physical ‘touching’. As we have seen over the past couple of weeks, lewd comments, emails, texts or seemingly innocuous advances can result in allegations of sexual harassment.

And yes, for these purposes the workplace includes after work drinks and the Christmas Party!

How do I deal with allegations of sexual harassment?

Where an allegation has been made against a member of staff (or ex-member of staff), a modern employer should deal with it with sensitivity and discretion. You should consider the personal turmoil which may have led up to the complaint and be prepared to hear the complainant out, regardless of your views on the severity of the alleged conduct or the seniority of the alleged offender.

It will usually be appropriate to investigate any alleged incidents of sexual harassment or abuse. The investigation should, where possible, be dealt with by someone independent to the case, the accuser and the alleged perpetrator in a way which minimises distress to all parties involved. Of course the investigation should be confidential, but employers should also consider more practical matters:

  • Should the accused be suspended?
  • Should the accuser and accused be prevented from working together in the short term?
  • What is the most appropriate venue for the investigation? The scene of the alleged incident will rarely be appropriate!
  • Do you need to speak to anyone else about the matter?
  • How will you phrase your questions to both parties?

Depending on the investigation findings it may then be appropriate to take disciplinary action. Conversely if there is no perceived case to answer after investigation, it is crucial that this is communicated to the accused and the accuser sensitively, without blame or judgement on either party. You will also need to think about how to manage the relationship between the individuals moving forward, perhaps with mediation.

What about historic allegations?

In some cases, the alleged conduct will have happened many years before any allegation is made. A modern employer should not dismiss an allegation as false or not worthy of investigation purely because it relates to historic conduct; certainly preparatory investigatory steps should be taken at least.

How can I be pro-active?

Let’s face it – there is little you can do about historical allegations of sexual conduct. There is also little you can do if a sexually charged employee is hell-bent on cornering their crush at the end of after work drinks at 3am in the dark corner of the bar. What you can do is take steps now to ensure that employees know:

  • Exactly what behaviour is, and is not, acceptable;
  •  What action to take if they feel they have been sexually harassed; and
  •  That any victims will be supported.

With that in mind:

  • Produce, publish and communicate your policy on sexual harassment in the workplace, the standards of conduct expected, what you consider to be the workplace and what action will be taken;
  • Re-train your staff (including directors) on sexual harassment and your policy on it; and
  • Review your grievance policy to check that it is appropriate to deal with sexual harassment matters.

Not only should all of that set out your stall on the matter and provide a mechanism for dealing with it, it will also offer you protections and legal defences as an employer if your business ever comes in the firing line.

If you would like more information on the content of this article, details of how to deal with allegations and how you can take a proactive approach to preventing sexual harassment, please call our Employmentor Team on 01603 281139.

Note: The content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any particular circumstance.

Mental Health in the Workplace

Posted by: on Oct 10, 2017 | No Comments

Mental health and wellbeing is an issue which touches every corner of society. This year, a report by Business in the Community suggested that three in five (60%) employees have experienced a mental health problem due to work, or where work was a contributing factor. This World Mental Health Day, we look at why mental health in the workplace matters (with the help of a lot of statistics!) and what a modern employer can do to help.

What’s the issue?

Poor mental health has a negative effect on both individuals and businesses, so as an employer it is important to keep an eye on the mental wellbeing of your staff. Poor mental health can lead to increased short term absences, high turnover of staff and decreased productivity.

In addition, almost one in three (31%) employees have been formally diagnosed with a mental health issue. Where an employee’s poor mental health amounts to a disability, their employer may have to make adjustments to their employment or physical surroundings (where it would be reasonable to do so).

It is therefore in the best interests of both employers and employees to help ensure employees’ mental wellbeing is safeguarded.

What can employers do?

It is important to have an open dialogue about mental health concerns. Only 53% of employees feel comfortable talking about mental health issues at work, and only 11% of those who have suffered from a mental health issue have disclosed it to their line manager. This is perhaps unsurprising given that 15% of employees who disclosed a mental health issue to a line manager say that they then became subject to disciplinary procedures, dismissal or demotion.

Modern employers should encourage employees to come forward with issues which are causing stress or concerns at an early stage. This will allow managers to assess the scale of the problem, offer support to the employee if appropriate, make changes if appropriate, or offer additional training. Employees should be reassured that they will not be subject to disciplinary procedures as a result of declaring a mental health issue (and, legally, should not be so subject!).

Employees taking intermittent short-term absences from work can be disruptive to an employer’s business. When an employee takes time off due to mental health issues, communication is key. Employers may consider altering the requirement for employees to call in when they are off sick, instead offering email or text as a temporary option if it helps to overcome a boundary faced by an employee with a mental health problem. Equally, setting parameters for updates and communication is crucial – too little is just as bad as too often! Back-to-work meetings can be a helpful tool to assist those who may be struggling with their mental health and open up lines of dialogue.

Where absences are more long-term, employers should attempt to keep lines of dialogue open. Offering support to employees whilst they are on long-term sickness absence may help encourage them back to work and will also help the employer establish whether a disability has developed. This is important, as in some circumstances there is a duty on employers to make reasonable adjustments for disabled employees.

It is also important that managers know how to tackle the issue of mental health absences and the conversations surrounding them. Training is therefore a key part of taking a proactive approach to mental health in the workplace. Whilst 84% of managers agree that the mental wellbeing of employees is their responsibility, only 24% of managers have received any training in mental health.

What are the benefits?

In short: happy, productive staff who aren’t suing you!

Taking a positive, proactive approach to mental health in the workplace can help reduce staff turnover, reduce the amount of work days lost to sick leave and ultimately make your business more productive and profitable. It also has huge reputational benefits and puts you a step further on the road to truly being a “modern employer”.

If you would like more information on the content of this article and how you can take a proactive stance on mental health in the workplace, please call our Employmentor Team on 01603 281139.

 

Note: The content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any particular circumstance.

Compensation in Discrimination Claims set to Increase

Posted by: on Sep 11, 2017 | No Comments

New “bands” for calculating compensation to Claimants for “injury to feelings” in discrimination claims have been published, which come into effect for claims brought on or after today, 11 September 2017.

For claims issued from today, compensation for “injury to feelings” will be at the following rates:

  • Lower band: £800 – £8,400
  • Middle band: £8,400 – £25,200
  • Upper band: £25,200 – £42,000
  • Exceptional cases: £42,000 +

What is injury to feelings?

Injury to feelings is compensation awarded in discrimination claims. It is compensation to a Claimant for “injured feelings” – i.e. the hurt, upset, anxiety or distress that they have suffered as a result of discriminatory acts.

A Claimant does not usually need to show medical evidence or a diagnosis of any psychiatric injury arising from the discrimination in order to claim injury to feelings. Where a Tribunal is satisfied that a Claimant has been subject to unlawful discrimination, it then assesses how much upset a Claimant has suffered, looking at all of the circumstances of the case before it, to decide how much compensation should be awarded for injured feelings. The Tribunal does that by categorising treatment into “bands”:

  • The lower band. This band is used in less serious cases of discrimination, for example where the act of discrimination is an isolated or one off occurrence.
  • The middle band. This band is helpfully described by the Tribunal as being for “serious cases, which do not merit an award in the highest band”.
  • The upper band. The Tribunal will find that an award in the upper band is appropriate in the most serious cases, for instance whether there has been a lengthy campaign of discriminatory treatment. Only in the most exceptional cases will an award for injury to feelings exceed the upper band limits.

Once the Tribunal has determined which band the matter falls in to, it then looks to the set compensation levels for that band in order to determine how much compensation the Claimant should receive. So, if the Tribunal determines that the compensation awarded should be in the lower band, the Claimant will receive between £800 – £8,400 compensation for injury to feelings. The Tribunal also has the power to award a Claimant other compensation on top of that, including for any financial loss suffered, and for being unfairly dismissed (if applicable).

Why the change?

Earlier this year, the Court of Appeal made clear that it felt that compensation for injury to feelings had fallen behind inflation and was therefore in need of adjustment. That prompted the increase.

What does this mean?

The increase in the compensation bands is dramatic. Previously, the limits were £600 – £6,000 for the lower band; £6,000 – £18,000 for the middle band; and £18,000 – £30,000 for the upper band. As a result, the potential exposure to employers in discrimination claims has markedly increased.

For discrimination claims brought on or after 11 September 2017, the position is simple; a Claimant can now recover more than they would have done had they issued the claim last week. That said, it is important to take this uplift against the backdrop that awards in the upper and exceptional bands are rare, with the current average award for discrimination claims being just under £14,000. Whilst that average may increase, it is unlikely that many will ever face the upper band awards above.

For ongoing claims, the position is less clear. The Tribunal may exercise its discretion to apply a % increase on the previous bands (likely a 10% increase), though it is unlikely it would apply the new bands absolutely to any existing claims. What happens in practice we will wait to see…

So, the advice to employers does not change: tread carefully, and try not to unlawfully discriminate against employees…whilst it was potentially costly before, it is even more so now! If you are facing any allegations of discrimination, or are dealing with employees who hold a characteristics which might allow them to allege discrimination, please do not hesitate to be in touch with one of the Team for advice.

If you would like more information on the content of this article please contact our Employmentor Team on 01603 281139.

 

Note: The content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any particular circumstance.

Holiday Pay Updates – Back with a Vengeance

Posted by: on Aug 2, 2017 | No Comments

Some of you will no doubt remember the barrage of holiday pay emails and updates we sent to you during 2015 and early 2016. After an 18 month hiatus, there has been another ruling in this arena which (almost) sets the position straight.

For those that do not recall (or have repressed) the holiday pay dramas of 2015, there was a flurry of cases on holiday which, in short, appeared to increase the scope of payments that must be included in holiday pay. At the start of 2016 we were certain that compulsory, non-voluntary overtime should be included in holiday pay calculations, as should a value for lost commission (which, of course, cannot be earned during a period of holiday), although no guidance had been provided on how to carry out those calculations. What we were also clear on was that truly voluntary overtime did not need to be taken into account in calculating holiday pay.

The Employment Appeal Tribunal has ruled this week in the case of Dudley Metropolitan Borough Council v Willetts that voluntary overtime does need to be included in holiday pay calculations where the circumstances mean that pay earned for voluntary overtime essentially forms part of a worker’s normal pay. It also confirmed that, in that case, holiday pay should include an amount in respect of on-call payments, and mileage allowances which were taxable as a benefit in kind, where they formed part of a worker’s normal pay.

Voluntary overtime

The decision means that, in contrast to the previous position where many employers did not consider voluntary overtime in calculating holiday pay, now voluntary overtime must be considered where it is if of a sufficient pattern to form part of “normal pay”. This will come down to the circumstances of each case, but the basic rule of thumb will be that the more regular the voluntary overtime, the more likely it is necessary to include it in holiday pay calculations. It is unlikely that you will need to consider truly one-off voluntary overtime hours worked when calculating holiday pay.

The general position

The basic position now is that holiday pay should include an amount in respect of any normal pay which is normally received by workers. That includes:

  • Commission payments
  • Overtime of any sort (whether voluntary, compulsory, or guaranteed)
  • Shift allowances
  • Stand by payments
  • Call out payments
  • Any travel payments which are treated as taxable remuneration (as opposed to reimbursement of expenses).

The position on whether or not bonuses should be included in holiday calculations remains uncertain. It seems likely that productivity or attendance bonuses will be considered part of normal pay, and therefore payable to workers when on holiday. Annual discretionary bonuses, bonuses based on purely company performance, and other bonuses are a different matter – currently there is no requirement that they should be included in holiday pay calculations, but as yet that has not been ruled on by the courts.

So that’s settled then?

For now, the elements listed above need to be included in holiday pay calculations. However, this decision could be appealed (as seems to be the trend in holiday pay cases), and we will have to wait to see if that is the case.

It also remains to be seen whether the Brexit process will affect the current position, which is derived from and based on European Law. It is therefore, in theory, open to the Government to depart from this decision post-Brexit.

There are also matters that are not settled – namely whether bonuses should be included in holiday pay calculations, and, perhaps more crucially, how holiday pay figures should actually be calculated. It is not clear whether they should be calculated with reference to the normal pay in the 12 weeks prior to taking holiday, 12 months prior, or something else. Some commentators have even suggested that the period for calculation should be on a case by case basis, which would, in our view, be wholly unsatisfactory and unworkable. Some employers are using a 12 week average, but it remains to be seen whether that is correct.

The key point to note is also that this ruling (and the previous rulings on this issue) only apply to the 4 weeks / 20 days holiday prescribed by European Law. The other 1.6 weeks / 8 days required by UK law is not affected by these cases. That means that employers can pay “basic pay” (without commission, overtime, allowances etc.) only, for 8 days of holiday. Needless to say, that makes calculating holiday pay incredibly administratively burdensome.

What do you need to do?

Legally speaking, all workers who take holiday should now, for 20 days of their holiday, receive a payment which includes an element for all the applicable factors listed above. There are various ways suggested by commentators to make those calculations, depending on the particular elements of pay that are to be included, and all of the ways are tricky and labour intensive, and, unfortunately, facts specific. Employers requiring any advice on that should contact the Employmentor Team, and we can help with the various calculation options and which one will be best / most appropriate for a particular scenario.

Practically, it may well be worth considering more generally the arrangements under which your staff are hired and your business is run. Options include:

  • Assessing the way in which you pay your staff; in particular your use of overtime, commission, and call-out pay arrangements;
  •  Assessing the manner in which staff hours are set and workloads are managed. A move to annualised hours or guaranteed hours might be more palatable and / or certain;
  •  Considering costs cutting measures elsewhere in your business if you cannot afford to absorb the increased holiday pay costs.

Planned carefully, changes could be made to the arrangements with your staff which will enable you to be (relatively) certain as to what your wage bill will be each year (as opposed to a more fluctuating one) and to manage staffing levels appropriately. If you would like to speak with any member of the Employmentor Team to chat through your options, please call 01603 281139 to arrange that.

Note: The content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any particular circumstance.