Holiday Pay

Do any of your employees receive basic pay and commission on sales in their salaries?  Do any work overtime?  Do any receive allowances relating to their roles?

Most employment contracts include a clause that holiday pay will be calculated on the basis of their basic pay alone which has been the accepted legal position, based on a Court of Appeal case in 2003.

However things are set to change now.  In the first case a depot worker’s contract specified a 35 hour working week of seven hour shifts and overtime when necessary. He regularly worked up to nine hours each day and sometimes 12 hours to cover for his colleagues. He received enhanced pay premiums when working in excess of the contractual seven hours a day. His holiday pay only reflected his basic salary. The employment tribunal found that the overtime hours worked were ‘intrinsically linked’ to his performance of his role and it was irrelevant whether the overtime was voluntary or not.

A second case concerning the level of pay in respect of annual leave relates to commission payments. The claimant was paid a basic salary plus variable commission that was paid in arrears. He took two weeks paid annual leave. During this period he received his basic salary plus commission from previous sales. However, while on annual leave he was unable to generate commission, so he received a reduced income in the months following his return to work. The claimant argued at the employment tribunal that he has effectively been paid too little holiday pay as a consequence; and the tribunal referred this question to the ECJ. A European Court Advocate General has recently produced an opinion on this issue which is shortly to be considered by the European Court of Justice which states that Mr Lock should not just receive basic pay plus commission falling due during the holiday period – it should also include compensation for the fact that he would be unable to make sales and therefore earn commission while on annual leave.

Finally British Airways pilots alleged certain flying allowances and time away from base pay should be included in the calculation of their holiday pay. The case rumbled on for months going to the Court of Appeal, Supreme Court and the ECJ. Although the case is complex and concerns the Civil Aviation Working Time Regulations, the basic outcome is that if a worker’s pay during the four-weeks statutory holiday does not correspond with their normal remuneration this is probably in breach of the Working Time Directive and must be interpreted accordingly.

Implications for employers

This means that workers could earn more while on annual leave to make up for the fact that they are likely to earn less after a period of annual leave.

Employers should review their overtime arrangements to ensure they have sufficient control over them, and can avoid abuse and manipulation of holiday pay.

Stay tuned for further developments on these important issues.

Immigration Minister Resigns

Recruitment is not an exact science and interviews are carried out anywhere on a scale between brilliant and abysmal according to the skills, knowledge and expertise of the interviewer.  There are legalities to be adhered to in several areas, but there is one area that many employers I meet either don’t know about or just simply can’t be bothered with and ignore no matter how many times I reinforce it, and that is:

Under the Immigration, Asylum and Nationality Act 2006 before you offer employment to a potential member of staff, certain checks must be carried out to ensure that they have a right to work in the United Kingdom (UK). These checks must be carried out for ALL staff, regardless of their nationality.

You must check and copy/record one of a number of specified documents (or two documents in a specified combination) from the Immigration, Asylum and Nationality Act 2006  list A or list B. The documents in list A indicate that the holder is entitled to live and work in the UK indefinitely. These documents provide an ongoing excuse against payment of a civil penalty.

It is not sufficient to say that a recruitment agency must have checked the applicant because the agency is not the employer and may have missed a falsified document.  In fact I have twice been presented with fake passports by foreign workers which have presumably been ‘checked’ by an agency.

Immigration minister Mark Harper has just resigned from the government after it emerged his cleaner did not have permission to work in the UK.  There was no suggestion he had knowingly employed an illegal immigrant.  He had made checks when he first employed the cleaner in April 2007, taking a copy of her passport and a Home Office letter which stated she had the right to work in the UK.

Mark Harper has talked a lot about employers and landlords carrying out “reasonable checks” on workers and thought it right he should re-check his cleaner’s documents were in order but when his private office checked the details with immigration officials, it was found she did not have indefinite leave to stay in the UK.

Labour peer Baroness Scotland when she was Attorney General in 2009 and one of the drafters of the legislation, had similar difficulties with her housekeeper’s immigration status.  She was fined £5,000 for illegally employing an illegal immigrant, but did not resign over the matter.

Mr Harper launched a fleet of vans which were driven around parts of London carrying a message for illegal immigrants to “Go home or face arrest”.  At the start of this year, when work restrictions for Bulgarians and Romanians were lifted, Mr Harper insisted the benefits system had been “tightened up” so people coming to the UK did so to work, not claim benefits.

If you would like a copy of List A and List B and advice on checking documents, just get in touch and I will be pleased to help.

Employee Matters

It’s that time of year again when the new rates for certain statutory payments are set and here’s the essentials you need to know!

From 6 April 2014:

  • Statutory sick pay will increase to £87.55 (from £86.70);
  • Statutory maternity pay will increase to £138.18 (from £136.78);
  • Statutory adoption pay will increase to £138.18 (from £136.78)
  • Ordinary and additional paternity pay will increase to £138.18 (from £136.78).

What this means to you is that you must get ready now to pay your eligible employees in line with the new minimum rates.

If you have any questions at all, if you would like any advice or information on these changes, or how to manage sickness absence, maternity or paternity leave, please don’t hesitate to get in touch and I’ll be pleased to advise.