MEMBERSHIP INSIGHT
On your behalf
Policy team update
Diana Bruce MCIPPdip, CIPP senior policy liaison officer, provides an update on a range of topics
O n your behalf always contains updates from the CIPP’s policy team’s consultation work; however, one of the effects of the ‘snap’ election is the dissolution of government. The pre- election period (purdah) is a time where only essential government business is meant to take place, so not only are most consultation meetings postponed but expected publications are delayed. At the time of writing the general election on 8 June is about to take place; and ahead of the big vote, party manifestos are being dissected, disseminated and debated by businesses and media alike. Once a new government has been elected we will begin to know which clauses and issues will be resumed in the Finance Bill and have an idea of future consultation work. I say ‘start to be’ in a position as the Brexit negotiations will no doubt take precedence but certainly our routine consultation forums will recommence. In the meantime, here are some newsworthy items, we would like to bring to your attention Holiday pay How up-to-date is your knowledge on salaried hours contracts? Holiday pay calculations such as these continue to come under scrutiny and serve as an opportunity, if one were needed, to highlight the importance of remaining up to date with the latest guidance from BEIS (Department for Business, Energy and Industrial Strategy). Employers often make use of salaried hours contracts to provide their employees with a steady and consistent income stream
throughout the year where their working hours or weeks may vary either due to seasonal demands or term-time working. ...so have taken a ‘do nothing’ approach, especially when existing government guidance is vague The latest guidance on calculating the minimum wage (http://bit.ly/2rrZ5f6) – which has taken on even greater importance since the increase in hourly rates brought in through the national living wage – was last updated in April 2017. Have you looked recently? Here is an extract: “To be a salaried-hours contract, the contract between you and the worker should set out: ● a basic number of hours for which the worker is to be paid (for example 2,000 hours) ● that the worker is entitled to an annual salary. “You do not have to show the total basic hours for a complete year but it is better to do so. However, it must be possible to precisely calculate what the total basic annual number of hours is in relation to the full year.” One of the reasons why employers get so confused about how they should
be calculating holiday pay and leave, notwithstanding the circumstances of individual businesses, is that no-one is quite sure what the law says, and even less how it should be applied. And this is understandable because there have been numerous court cases challenging the calculation of holiday pay. Although in most instances the judgement only applies to that specific case, there can often be widespread implications. With so many cases still ongoing it’s no surprise to hear that some employers are unclear what they should be doing so have taken a ‘do nothing’ approach, especially when existing government guidance is vague. For some time now the CIPP policy team has been engaging with BEIS and we have, to date, held three Policy Think Tanks to discuss the problems faced by employers when calculating holiday pay and leave; the end objective being to produce clearer guidance. These are just some of the key points to come out of the Think Tank discussions: ● What exactly is guaranteed, non- guaranteed and voluntary overtime and equally importantly, what is not? What is a bonus and what is commission? ● What does regular mean? ● Can there be scenarios and worked examples covering both entitlement and actual calculations? ● Can there be a broader range of definitions and examples to give employers more scope to be able to apply the principles to their particular circumstance? It was heartening to hear the BEIS representative state that, although we are
| Professional in Payroll, Pensions and Reward | July/August 2017 | Issue 32 4
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