New to HR? Templates, tools and development to make you a seasoned pro in no time.
Shawn Premer shows how doing the right thing for employees leads to positive business results.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
The United Kingdom Employment Appeal Tribunal (EAT) decided that nonguaranteed overtime should be taken into account for the purpose of calculating holiday pay in the much publicized decision
Bear Scotland Ltd v Fulton UKEATS/0047/13 & Others.
This decision is based on the tribunal’s view that European working-time legislation requires nonguaranteed overtime (i.e., overtime which the employer is not obliged to offer but which the employee is obliged to work if offered) to be included within “normal” remuneration when calculating holiday pay and that U.K. working-time legislation should be interpreted in line with European law in this regard. What this means in practice is that to comply with U.K. working-time legislation, employers now need to calculate holiday pay on the basis of the average remuneration received by an employee, based on their basic pay and any nonguaranteed overtime worked (as well as any other “normal” remuneration) over the 12-week period prior to their taking holiday.
Aside from potentially significant variations in holiday pay rates throughout the year, this decision could have major financial consequences for employers that require employees to work overtime. However, initial fears that businesses would be exposed to huge retrospective claims have been much reduced as the EAT’s decision limited the scope for this to occur in the following ways:
Although the EAT gave the parties leave to appeal, it is uncertain at this stage whether such appeal will be pursued and if it is, it is likely to take several months for any appeal decision to be delivered. It is also worth noting that the U.K. government has set up a task force in an attempt to assess and limit the impact of the decision but it is also likely to be some time before any decision taken by this task force is implemented.
While awaiting an appeal decision or governmental measures, employers affected by this judgment will need to decide whether or not to start including nonguaranteed overtime in holiday pay. In any event, and in particular if they choose not to do so, they would be well-advised to make some financial provision and/or seek insurance for their potential retrospective and future liabilities.
Finally and perhaps of more general importance to employers, is an update on the case of
Lock v British Gas Trading Limited (C-539/12) in which the European Court of Justice decided that
sales-based commission should be taken into account for the purposes of calculating holiday pay. This case was remitted to a U.K. Employment Tribunal to determine its impact under U.K. law and the hearing is expected to take place in the early part of 2015.
Alex Denny is a partner and Emma Vennesson an associate in Faegre Baker Daniels’ London office.
Copyright 2014 ©
Faegre Baker Daniels LLP. All rights reserved.
SHRM Online Global HR page
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Talent Attraction Study: What Matters to the Modern Candidate
Apply by March 23
SHRM’s HR Vendor Directory contains over 3,200 companies