Partner Article

Nottingham HR Agency Issues Stark Warning To Employers Amidst Holiday Pay Guidelines

After months of confusion surrounding the rulings on the inclusion of overtime and commission payments in holiday pay, a Nottingham based HR agency is urging employers to assess their individual situation and calculate their liability for potential claims along with ensuring new procedures are put in place to meet their new ongoing liabilities.

Over the past year, Long Eaton based Peak HR, has followed the three key decisions on the subject of holiday pay and is advising businesses to review the holiday pay for their employees for the past two years to fully understand their liability under these rulings.

The rulings have caused employers across the country concern over the possibility of claims stretching back many years with crippling financial implications, however some pressure was relieved earlier this year when the government confirmed that it was acting on pressure from the British Chamber of Commerce and introducing a two-year limit for backdated claims.

Two of the key decisions on the issue came from the Employment Appeals Tribunal (EAT) and the other from the highest court in the European justice system, the European Court of Justice (ECJ) with the former dealing with overtime and the latter handling commission payments, it was also confirmed by EAT that UK law must follow any decision made by the ECJ.

Managing Director of Peak HR, Cheryl Willey said: “At this time there still isn’t a definitive answer on how to calculate holiday pay but we can advise employers in the best way to take early action.

“The EAT guidance on overtime is clear; when calculating holiday pay, employers should include regular non-guaranteed overtime, basically any overtime that isn’t included in an employees contract but is obliged to work if required by their boss.

“The EAT guidance on commission is that employers should include commission payments in holiday pay for employees whose pay would normally include commission, the problem is there has been no definitive guidance from either court as to how much commission should be calculated for holiday pay.”

Business owners have been concerned about how they should calculate how much overtime and commission should be included in holiday pay.

Peak HR is advising employers to follow the new guidance, which states that in normal circumstances, an employer should review the previous 12 weeks’ pay and take the average amount of overtime and commission paid to calculate the additional holiday pay.

Cheryl added: “The problem we have when calculating commission and overtime for holiday pay is that the ECJ hasn’t reached a final decision on specific details on the calculation. Until there is official guidance or legislation, the best way for employers to calculate holiday pay is to use an employees previous three months pay and to find an average of their total bonuses to include in their holiday pay.”

For more information, please visit: http://www.peakhr.co.uk/

This was posted in Bdaily's Members' News section by Poppy-PR .