Policy News Journal - 2016-17

The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal

Employment Tribunals

Childcare vouchers and maternity leave 5 February 2016

The Employment Appeal Tribunal (EAT) has heard an appeal on the previously untested issue of whether or not an employer can make it a requirement of joining its childcare vouchers scheme that employees agree to suspend their membership while on maternity leave In June 2015 the Employment Tribunal found in the case of Donaldson v Peninsula Business Services that it was discriminatory for the employer to make it a requirement to join its childcare vouchers scheme that employees agree to cease to be a member of the scheme while on maternity leave.

On 22 January 2016, the Employment Appeal Tribunal (EAT) heard the appeal against the employment tribunal, the outcome of which we are waiting to hear.

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Employers must include commission in holiday pay calculation 23 February 2016

In the long running British Gas v Lock case, the Employment Appeal Tribunal has dismissed the appeal from British Gas, however we must await the outcome of further cases before we know exactly how to include commission when calculating holiday pay. The Employment Appeal Tribunal (EAT) dismissed the appeal made by British Gas against Lock and held that there is no difference in principle between payment for non-guaranteed overtime and payment in respect of commission so far as annual leave pay is concerned. The non-guaranteed overtime relates to the case of Bear Scotland v Fulton where in October 2014 the EAT ruled that EU law can be read across into the Employment Rights Act 1996 so as to require employers to take into account non-guaranteed overtime payments when calculating pay for the basic four week holiday entitlement under regulation 13 of the Working Time Regulations 1998. Background Mr Lock was at the material time employed by British Gas as a salesman. His remuneration package included a basic salary plus commission which was based on the number and type of contracts he persuaded customers to enter into; in other words it was results-based commission and did not depend on how much work was done. Mr Lock took a number of days’ holiday to which he was entitled, however, the remuneration paid to him during holidays consisted only of basic salary and any commission which had been earned earlier but happened to be paid at that time. Since he was not working he could not earn any commission while he was on holiday. He complained to the Employment Tribunal that that method of calculating his holiday pay was contrary to the requirements of section 221 of the Employment Rights Act 1996 and regulation 16 of the Working Time Regulations 1998 , as amended. He submitted that the domestic legislation could be, and therefore had to be, interpreted in a way which conforms to the requirements of Article 7 of the European Union’s Working Time Directive . There had previously been a reference made by the Employment Tribunal to the Court of Justice of the European Union, which held that Article 7 of the Directive requires results-based commission to be taken into account when calculating an employee’s holiday pay. In March 2015 the Employment Tribunal then held that it was possible to interpret the domestic legislation in a way which conforms to the requirements of the Directive by reading words into regulation 16.

British Gas subsequently appealed.

CIPP comment Although the Employment Appeal Tribunal (EAT) has at last handed down its decision in this case, employers are still left with uncertainty as the reference period to be used to calculate holiday pay still needs clarification. The


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