Lock holiday pay case to be appealed

British Gas has lodged an appeal against the recent Employment Tribunal decision in Lock v British Gas. The Employment Tribunal (following the EAT's decision in Bear Scotland v Fulton that employers should include non-guaranteed overtime payments in holiday pay) held that the calculation of the basic four week holiday entitlement under Regulation 13 of the Working Time Regulations should include commission. In the appeal, British Gas's case is that:

  • Commission and non-guaranteed overtime are dealt with under different provisions, which use different language, and the Tribunal incorrectly concluded that Bear Scotland, a case about overtime, had any bearing on the outcome of Lock; and
  • In any event, the EAT in Bear Scotland incorrectly concluded that the UK's domestic legislation could be interpreted purposively to give effect to EU law.

If the appeal succeeds, it could affect claims that involve payments other than commission. The appeal is likely to be heard later this year.  

Holiday year complications

Under working time rules, UK employees are entitled to a minimum of 5.6 weeks’ annual leave. This equates to 28 days’ leave per year for employees working a five-day week. The 28 days can include bank holidays, of which there are usually eight per year.

Calculating holiday pay if the holiday year runs from 1 April 2015 to 31 March 2016 has just become a bit more complicated. Due to the Easter bank holidays falling on 3 and 6 April in 2015 and then on 25 and 28 March 2016, there will be ten bank holidays from April 2015 to end of March 2016. Conversely from 1 April 2016 to 31 March 2017 there will only be six bank holidays.

It is worth checking the wording of how employees’ paid annual leave entitlement is expressed. If it is something like “20 days’ holiday plus bank holidays”, then employees will gain during this holiday year (April 2015-March 2016) but then receive less than their statutory entitlement next holiday year. In such cases employers would either need to bear the additional cost or negotiate a variation to employee's contracts for the next couple of years.

Auto enrolment fines

In the February 2015 edition of Law at Work we reported on the toughening approach of the Pensions Regulator in relation to non-compliance with auto enrolment obligations. This has recently been reinforced in the Pensions Regulator's Automatic Enrolment Compliance and Enforcement bulletin for the first quarter of 2015, which confirmed that in that quarter it issued four escalating penalties (which can range from between £50 and £10,000 per day (depending on size)) to employers for non-compliance. Indeed, the number of fixed penalties (of £400) in that period was 198, an increase on the 166 which were issued in the same quarter last year  – a sobering reminder to employers to ensure that they comply with their auto enrolment obligations and within the appropriate statutory timescales that apply to them. 

How will the changes to childcare vouchers affect staff?

The Childcare Payments Bill, announced in the 2013 Budget, will see the current childcare voucher system replaced from Autumn 2015 with a new childcare scheme, which offers 20% of the cost paid by the government. Employees already in a voucher scheme will be able to continue in that scheme if their employer chooses to offer it.

Read more about the new scheme, including the comments of Taylor Wessing's Rachel Farr

Firing employees in Europe: an overview for North Americans

We recently hosted a webinar on dismissal laws across Europe as part of our series of webinars aimed at North Americans wanting to understand employment laws across Europe.

A recording of the webinar

Our next webinar will be on European leave laws and will take place on 10 June.  If you would like to attend, please contact Rebecca Morgan.

May's issue of Pensions Priorities

The latest issue of Pensions Priorities looks at recent developments in the pensions arena including: new pension flexibilities, employer debt, automatic transfers framework and auto enrolment modifications.