FEATURE TOPIC
if a worker receives regular bonus, commission or overtime payments, an employer needs to calculate what an average week’s pay would be for that worker. Once a weekly rate of pay is obtained, an employer would need to prorate this value, to determine an hourly rate. I would suggest basing this calculation on the number of hours the worker is contracted to work per week, in line with their employment contract. The key point to note here is that employers must remain consistent with this calculation for all workers. “This is the perfect opportunity to remind employers they can go above and beyond legislative requirements” Do you find that many employers now include all elements of pay in the average weekly earnings calculation, to ensure a pending case won’t have repercussions in the future, as seen in commission and overtime cases? BP: Yes, there is such anxiety around falling foul of the overly complicated legislation that many employers are including all elements of pay ‘just to be sure’. It’s particularly difficult for employers to understand which element of the holiday entitlement (UK or EU) should be used first, which impacts on the inclusion or exclusion of commission and overtime. LS: No, I still find employers are behind the curve on this and are slow to implement. SO’S: As I’m not in an operational payroll role, I cannot comment on whether this is being seen in practice – although this is the perfect opportunity to remind employers they can go above and beyond legislative requirements. Those who wish to include all elements of pay are more than OK to do so. Whether this is a valid solution that
of working in operational payroll, I would agree that the interpretation and application of holiday pay legislation, alongside holiday entitlement calculations, sits firmly with payroll professionals, rather than HR. Neil Tonks: As always, there’s a range of ways organisations approach this, from HR departments that dictate everything, to those which rely entirely on payroll to advise. “There are several cases which highlight instances where employers and businesses have failed to apply legislation relating to holiday entitlement and pay correctly” The law sets out a minimum requirement and many employers choose to be more generous. That decision ought to be made by HR, but payroll will be the ones implementing it, so the best approach is for the departments to work together to ensure a full understanding of both the legal requirements and the organisation’s policy. Currently, there are different rules for the 20 days’ holiday which come from European Union (EU) law and the additional eight days which are based on UK law. Many employers ignore this and pay the EU-based rate for everything, but this isn’t universal and there are sometimes different calculations. That makes things even more complex for payroll, so the need for everyone to work together is even more important. Additionally, this situation may well change because of a current government proposal so it’s important for everyone to remain up to date on developments. When only hours are taken, rather than days, how should holiday pay be calculated? SO’S: Holiday pay is calculated on a worker’s normal salary. Therefore,
This issue, Jerome spoke to:
Do you find that employers rely on their payroll department rather than the human resources (HR) department to interpret holiday pay legislation? Beverley Priest: From my experience, the payroll department is usually the first port of call for any questions regarding holiday pay, due to its impact on employee payslips. However, due to its complexities and the implications of getting it wrong, our HR department specialises in the interpretation of employment law and legislation but works very closely with the payroll department to ensure pay is correct and employers are legally compliant. There are many cases and judgments which spring to mind relating to holiday entitlement and pay. Given that we provide HR and payroll support / advice specifically to the education sector, the case currently causing us the biggest headache is Harpur Trust v Brazel. We’re awaiting the outcome of the latest consultation. There are several cases which highlight instances where employers and businesses have failed to apply legislation relating to holiday entitlement and pay correctly. Lara Smart: HR is typically the first point of contact, and depending on the business target operating model, a rewards team, policy team or centre of excellence function may take the lead on interpretation, with payroll left to configure and process. Where query management is concerned, payroll is typically expected to provide calculation breakdowns. Samantha O’Sullivan: From my own personal experience (knowing full well this won’t be the same for everyone) Beverley Priest, head of payroll and pensions optimisation, EPM Lara Smart ChFCIPPdip, director, LM Smart Consulting Samantha O’Sullivan MCIPPdip, policy lead, the CIPP Neil Tonks ChMCIPPdip, legislation manager, MHR.
41
| Professional in Payroll, Pensions and Reward |
Issue 92 | July - August 2023
Made with FlippingBook - Online magazine maker