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Bosses given four-point plan after holiday pay ruling

Commercial law firm Square One Law has drawn up a four-point action plan for bosses facing a controversial holiday pay ruling.

Last week the Employment Appeal Tribunal decided that holiday pay should be based on a worker’s normal pay, which may include overtime and commission if they are regularly required to work extra hours, rather than just their basic salary.

Employment law expert Jean-Pierre van Zyl from Newcastle-based Square One Law has draw up a checklist for employers unsure of how to approach the changes.

Jean-Pierre said: “Square One Law has been tracking this issue for some time and our employment team is already briefing clients on the implications. This is a complex and far-reaching decision. Permission to appeal to the Court of Appeal has been granted, so a risk remains that the decision may be overturned in whole or in part.

“We believe the retrospective application will receive most attention. Last week’s judgement concluded that claims for underpayment of holiday pay with a break of more than three months will be out of time. If an appeal by the employees on this point succeeds, claims could stretch back to 1998 when the Working Time Regulations were introduced.”

“We are advising company bosses that their staff and trade unions will begin to query the value of holiday pay if it does not include overtime and other payments, so there are some simple steps to put in place as soon as possible.”
Square One Law’s action plan says:

  1. Go through your remuneration structure to identify terms and staff that are affected by absence due to annual leave.
  2. Manage the payment of historic liabilities by calculating the time period that has lapsed since the last underpayment.
  3. Consider whether you wish to enhance future holiday pay, “to the minimum extent required by law from time to time”.
  4. Consider whether you wish to take steps to amend policies and contractual provisions to reduce and recognise the impact of this decision and implement any changes you wish to make (such as distinguishing between the value of EU     Holiday and UK Holiday pay).

Jean-Pierre added: “We will keep updating businesses as the situation may change as appeals are launched and individual cases decided.”

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