Policy News Journal - 2014-15

CIPP survey on the impact of the judgement regarding overtime and holiday pay calculations

7 November 2014

As you will probably be aware there have been a number of cases surrounding holiday pay and European rulings and on 4 November the UK Employment Appeals Tribunal ruled that overtime should be included when calculating holiday pay. Vince Cable has set up a task force and the CIPP has been invited to provide input from a payroll/employer perspective. So we can hopefully get some form of UK direction the task force will be working to strict deadlines. This short survey should take no more than 10 minutes to complete but if you could spare some of your precious time to share your company/payroll concerns with the policy team we would be most grateful. The survey will close on Tuesday 11 November 2014.

Employers capping overtime after holiday pay ruling

28 November 2014

Research by Sage UK suggests that one in ten small businesses are restricting non- guaranteed overtime as a result of the recent ruling concerning the calculation of holiday pay.

Many thanks to Sage UK for their report:

An estimated 295,000 workers in the UK face having their overtime capped following the landmark holiday pay ruling this month as employers look to limit potential claims by employees, research by Sage UK has found. The snap poll of 285 small businesses conducted by the business software and services provider found that one in ten small firms across the country will limit the amount of overtime that people can take equating to 40,000 small businesses. An estimated five million workers will be affected by the decision by the UK Employment Appeal Tribunal (EAT) according to the Department for Business, Innovation, and Skills. The ruling, made on November 4th, stated that under Working Time Regulations (WTR) non- guaranteed overtime should be factored in when calculating the amount of holiday pay that an employee is entitled to. Bosses must now factor in the 12-week period prior to a holiday when calculating holiday pay.

Furthermore, employees now have a right to back-claim for wages which were not previously factored in, potentially costing businesses thousands of pounds in backdated claims.

When the changes were explained to the respondents, two-thirds of business owners (62%) did not agree with the ruling. A further 29 per cent are concerned about the impact the ruling will have on their business, and 12 per cent said they were not aware of the ruling.

Lee Perkins, Managing Director of Sage UK's Start-up and Small Business Division said:

"The holiday pay ruling will undoubtedly create new challenges for businesses paying staff that regularly take overtime paid hours. The complexities mean a significant number of business owners are in the dark as to what to do next. This will be more clearly felt by small firms which do not have the same resources as larger businesses to easily make adjustments. "However, the holiday pay ruling does not need to be the administrative burden that it may first seem. With a robust payroll system in place, businesses will be able to easily calculate the amount they should be paying their employees when taking holiday time moving forward.

CIPP Policy News Journal

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