confirming that holiday pay should be calculated on the basis of normal remuneration, which will include remuneration “intrinsically linked to the performance of contractual tasks”. The Supreme Court remitted the claims to the employment tribunal to consider the appropriate payment to be made to the pilots to cover periods of paid annual leave. What does this mean for employers? Although this case is directly relevant to the airline industry and concerns the Aviation Directive, the CJEU made its decision on the basis that the same principles apply to both the Aviation Directive and the Working Time Directive (WTD). This therefore means that the ruling could have wider implications. Workers might argue that certain bonuses, commission payments and allowances form part of their “normal remuneration”. There is also a risk that workers could argue that even non- guaranteed overtime should be included in the holiday pay calculation. This would be particularly relevant to the Retail Sector where such overtime is common, especially in the run up to Christmas and other seasonal holidays. Employers might wish to consider how they use voluntary overtime and whether this would need to be changed if this could inflate the holiday pay bill. For example, an employee may be contracted to work 20 hours per week at £7 an hour, but in the 12 week leading up to a week’s holiday (the reference period for calculating holiday pay), works an average of 30 hours as voluntary overtime is regularly used. If this was to be included in the holiday pay calculation, the holiday would therefore cost the employer an additional £70. However, whilst employees in the public sector would be able to make such challenges based on this case, the implications for those in the private sector remain unclear. Under the Working Time Regulations (WTR), which implement the WTD domestically, and the Employment Rights Act 1996 (the ERA) there is a narrower definition of pay which private sector employers might still be able to rely on to resist such challenges. It remains to be seen whether courts will continue to apply the narrower definition of holiday pay in the domestic legislation or to interpret this more widely following this decision. In broad terms our advice is that the payment of overtime in holiday pay is not an issue lightly to be conceded by employers who may face challenges from employees, and employers should wait for the position to be tested further in the courts before making any concessions in respect of holiday pay.
PAY PROTECTION POLICIES AND THE EQUAL PAY ACT
11 December 2012
Do pay protection policies breach the Equal Pay Act 1970?
Not necessarily, said the Court of Appeal in Haq v The Audit Commission .
Daniel Barnett’s Employment Law Bulletin reports:
The Court held that the employment tribunal had not erred in law in finding that the Claimants had established a prima facie case of indirect sex discrimination. The employment tribunal was entitled to conclude that the Audit Commission's amalgamation of two administrative roles and its application of a pay protection policy to the affected employees had had a disparate adverse impact on the Claimants. The employment tribunal's analysis of the objective justification question was, however, wrong in law. The Court of Appeal rejected the tribunal's suggestion that 'red circling' the pay of those employees with higher pay points or assimilating the roles and making the employees with higher points redundant would have constituted a less discriminatory means of achieving the Commission's legitimate aims than the pay protection policy. The EAT was entitled to substitute its own view of the matter for that of the employment tribunal and the
CIPP Policy News Journal
12/04/2013, Page 72 of 362
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