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09th March 2017

Bear Scotland, Lock and Holiday Pay – Update

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Those involved in HR will be aware of the long-running saga regarding what payments an employer needs to include in holiday pay, other than basic pay.
In a series of cases over recent years, tribunals and courts have decided that, when an employee takes the holiday which they are entitled to as a result of the Working Time Directive (20 days for a full time employee), the pay that they receive must include not only basic pay, but also money to reflect other pay that the employee would normally have earned, had they been at work.

This may therefore include payments to reflect the following sums which the employee would have earned had they not taken time off:

  • Results-based commission.
  • Certain overtime pay.
  • Allowances which are not intended to cover costs incurred by the employee.
  • Bonuses linked to performance.
  • Deputisation/Acting up pay.
  • On call pay.
That said, many businesses were waiting to see how, if at all, the law may change if British Gas, the employer in the case of Lock, successfully appealed the Court of Appeal decision which went against them.

That appeal would be dealt with by the Supreme Court. However, permission to appeal has to be given, and British Gas we understand has been told by the Supreme Court that permission has been refused.

This is perhaps surprising given the importance of this area of law and the financial impact on businesses, but there we are.

The law has now crystallised in this area, though there still remains some uncertainty as to exactly when employees will qualify for these additional sums to be added to their holiday pay, and if, so, how it is calculated.

For more information on this, contact Nick Hall on 01604 233233 or click here to email Nick.