One of the most common topics on our advice lines is the vexed question of holiday pay. The Working Time Regulations have made this one of the most complex areas of law, and due to a number of recent higher court decisions, it is now a rapidly developing area. Below we bring you up to date with a number of recent developments. As you will see, the law is far from being settled yet.
Employees who are long-term absentees continue to accrue the entitlement to take holidays during their absence. The first reported case on this issue decided that employees could request a holiday whilst they were off sick (following the employer's holiday request procedures) then take a paid holiday, even though remaining off sick at the time. A subsequent case went further and decided that a holiday did not even have to be requested. Now the Court of Appeal is being asked to resolve this issue and a decision is expected soon.
Rolling up holiday pay is the practise of including an element of holiday pay in the employee's hourly rate of pay, therefore paying nothing when the employee actually takes the holiday. Is that lawful? No, said the Scottish Court of Session. Yes, said the English division of the Employment Appeal Tribunal, subject to certain conditions. We are therefore left with the highly unsatisfactory situation of different rules applying North and South of the border. It will require a House of Lords decision to resolve this matter.
- Commission Payments and Holiday Pay
For most employees with variable earnings, holiday pay must be calculated as an average of their previous 12 weeks' earnings. Where average earnings include commission payments, the Court of Appeal has decided that commission dependent on the success of the work did not need to be taken into account, but commission relating to the amount of work did count. This means that a hairdresser who earns a percentage of the cost of each haircut must have this commission included in her holiday pay calculations, whilst a salesman who only gets commission if he makes a sale will not be entitled to have his commission counted. This decision is difficult to reconcile with the wording of the legislation and again, it may take a House of Lords decision to resolve matters. |
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