A
European Court of Justice (ECJ) judgment last week could have huge finance
repercussions for UK businesses. The judgment in the case of Lock v British
Gas rules that holiday pay for those employees who work on commission should
include the commission that would have normally received had they been
working.
This
means that employers across all sectors may have to review their holiday pay
practices and if necessary change the way they pay their staff. The judgment
is also likely to apply to other kinds of variable pay including things like allowances
and bonuses.
In
a worst case scenario an employee may be able to claim back the variable pay
they lost when taking holiday back as far as 1998 (or possibly 1993 for
public-sector employers). The UK courts and tribunals have not yet decided
whether a shorter statutory limit could be applied.
John
Lewis has only this week announced its intention to pay out £40 million to
69,000 John Lewis and Waitrose staff after realising they had miscalculated
holiday pay for staff who worked Sundays and Bank Holidays for at least the
last seven years.
This only serves to highlight the difficulties of correctly interpreting
the Working Time Regulations, particularly in the area of holiday pay. If you
are an ARAG policyholder you can get legal advice on this matter by calling the
helpline number on your policy document. We will also provide representation
relating to contractual or statutory matters.
Rachael Wornes
Senior Marketing Executive
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