Thursday, 12 June 2014

What will European Court judgment cost your business?

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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