One of the most frequent requests we get is regarding holiday pay. How much annual leave does a worker get, how much should they be paid?

If employers find these calculations difficult, they are not alone. The picture in the UK is confusing, and especially so for those who work irregular patterns, or who receive variable amounts of pay.

General principles

The first, and overriding principle is that the law expects employees to take their annual leave. And to be rewarded sufficiently well so that they are not deterred from taking it because they lose out financially.

So, bear the following in mind:

• Annual leave allows workers to rest and relax away from work.
• Their holiday pay should reflect what they would have earned had they been working.
• Case law around holiday pay tries to ensure that this happens.
• If in doubt, recent case law has shown that the Courts are likely to favour the employee over the employer.
• The Government sets a minimum amount of annual leave, 5.6 weeks which equates to 28 days for someone that works 5 days a week. This includes Public/ Bank Holidays which people may or may not work according to their contract.
• Your contract may be more generous and if so, it should be adhered to.

Simple calculations first – Workers with fixed pay and hours

Many employees are workers with fixed hours. If they are also on fixed pay then the calculation should be very simple.

• They are entitled to a minimum of 28 days or 5.6 weeks of annual leave (whichever is the lower).
• Their holiday pay will be their normal daily or weekly pay rate.

For such employees, their pay remains the same every month, regardless of whether they take leave. They simply take their full leave every year.

If an employee is on a fixed shift premium, then their holiday pay should include that shift premium.

Part-time workers with fixed hours and fixed pay

Part-time workers with a fixed rota or fixed hours, will have a pro-rata entitlement according to their working hours.

If they work a regular three days a week on fixed hours, for instance, then their annual leave will be ⅗ of a full-time allowance (including ⅗ of their Public/Bank Holidays), but then every time they take a week’s holiday, that will only count as 3 days leave.

If they work 9 hours on a Monday and Friday, but 4 on a Wednesday, then it is simpler to calculate in hours – 22 hours a week x 5.6 = 123.2 hours leave, rounded* up to 124 hours. If they take leave on a Monday or Friday that will count as 9 hours, on a Wednesday as 4. A whole week is 22 hours.

* For practical and reasonable purposes, you are advised to round up to the nearest hour, half or whole day, you may never round down.

Their pay will be their normal rate of pay and their pay packet is unlikely to change.

Full or part-time workers on fixed hours, but variable pay

Many workers will be on commission, incentives and regular overtime, so their earnings will vary each pay interval. Employers used to think that such workers only needed to be paid basic pay while on leave.

We have always disagreed, as the Working Time Regulations 1998 has been clear on this matter, and a number of cases have borne this out. It is now firmly established that in such circumstances, workers need to be paid average holiday pay. To determine what constitutes e.g. regular overtime, if the employee does paid overtime most pay intervals, then that means it is regular and, therefore, average holiday pay is required.

The way to work this out:

• For workers who have been with you for more than a year, use the last 52 weeks (if monthly paid use 12 months) total pay, divide by 52 and then by the number of days or hours they work a week to arrive at a daily or hourly rate.
• For workers who have been with you for less than a year, use as many weeks as you can as a reference period in a similar way.
• Remember that this is a rolling 52-week period, so every time a worker wishes to take holiday this calculation must be done. The average holiday pay could be different each time.

Most regular payments can be included in this calculation, though Benefits in Kind and one off, annual or quarterly discretionary bonuses can be discounted as well.

The issue for employers is this is no longer simple to calculate. The rate will vary from pay period to pay period, on a monthly or weekly basis, to calculate holiday pay. Though many payroll systems will probably be adapted to be able to cope with it.

It is also worth reviewing how you approach groups of people who may do varying amounts of overtime or commission. Rather than having to constantly review who is doing regular overtime, it may be simpler to pay all of the group on an average basis.

Permanent workers on variable hours

This used to be simple, but since a recent case it has become a lot more complicated, and potentially more expensive. Note that the rules are different for casual and short-term contract workers, this only applies to those on permanent contracts.

Many such workers work in seasonal or educational roles, and used to be paid an extra 12.07% (5.6 weeks is 12.07% of a 46.4 week working year, in other words the calculation had deducted 5.6 weeks leave from the annual entitlement) to cover holiday when they were not working. This is no longer allowed as it tends to underestimate their leave pay.

Such workers should now get the full 5.6 weeks annual leave allowance, even if they only work part of the year. And the holiday pay is based on their pay for the weeks they work. Because of the nature of their work, such pay may be variable

So, the Government recommends that the calculation is done on:

• The last 52 weeks they worked, going back 104 weeks (2 years) if necessary.
• If they have worked less than that, use as many weeks as you can

Casual or contract workers

Any worker who works for you for any length of time starts to accrue annual leave from day one. Technically, somebody who works for you for one day will accrue a tiny amount of holiday.

However, given that 28 days is the minimum a full-time worker can expect for a year’s work, those working for as little as two weeks could have accrued just over one day’s holiday. Being very, very precise, 1.075 days.  Such rounding down with such a small decimal amount is probably acceptable, but generally always round up.

If they have not taken that leave during the time they work for you, then in their final pay packet they should be paid the accrued holiday. And that should be at the daily rate you have been paying them.

The same will apply to contract workers, you may well have taken them on for a three-month period.

Finally, agency workers are also entitled to holidays. At this point, it is worth checking with the agency exactly how they handle this, as those who work regularly for them could be provided for, and the rate to your organisation should reflect that.

“Rolled up” holiday pay

For casual workers, variable hours workers and contract workers, it used to be the practice that employers paid an extra amount to cover holidays. Typically, 12.07% (5.6 divided by the 46.4 weeks not on holiday). This was known as rolled up holiday pay.

For some time, this practice has been frowned on by the Courts, as it does not encourage the worker to take holidays, but in fact, to continue working as they earn at an enhanced rate.

And, since a recent court case, those in many sectors will be forced to finally abandon the practice as it also miscalculates the amount of pay such workers should receive. If you have traditionally paid such rolled up pay, then it is a practice that is open to legal challenge. And you may well find that such a challenge could prove very expensive, as employees could be missing out on 28 days every year.

 

One final point about holiday pay. In many circumstances where employers would think that their employees would not be entitled to holiday, it continues to accrue. The long-term sick, those who have been furloughed, those on family friendly leave or even in some cases, on unpaid leave e.g. sabbaticals, can continue to accrue holiday.

And, often this accrued holiday only really comes to light when the employee leaves your employment and the holiday entitlement is calculated.

As ever, these are complicated calculations. If you have any questions, then please contact us and we should be able to help. There are a number of publications on the Government’s website, detailed below, which may well be helpful. But they are not light reading.

Holiday entitlement: Holiday pay – GOV.UK

Guidance on calculating holiday pay for workers without fixed hours or pay – GOV.UK

Calculate holiday entitlement – GOV.UK

 

The guidance provided in this article is just that – guidance. Before taking any action, make sure that you know what you are doing, or call an expert for specific advice. 

Over the weekend, the Government announced a UK Public/Bank Holiday for next Monday, 19^th September to mark the Queen’s funeral.

The official announcement can be seen here:

Bank holiday announced for Her Majesty Queen Elizabeth II’s State Funeral on Monday 19 September – GOV.UK

The crucial point for many employers is that they do not have to give the time off, nor do they have to pay for it, but the announcement encourages them to do so.

“Does this Bank Holiday mean individuals can have the day off work?

This is a matter for discussion between individuals and their employer. There is no statutory entitlement to time off for Bank Holidays, but employers may include bank holidays as part of a worker’s leave entitlement.

The Government cannot interfere in existing contractual arrangements between employers and workers. However, we would expect that many workers will be able to take the day off on the Bank Holiday. We also expect employers to respond sensitively to requests from workers who wish to take the day of the funeral off work.”

It has been suggested that employers, especially those who have to be open next Monday, might like to give employees at work the opportunity to watch the funeral if they can. Just two things to think about:

• Events, including the initial procession and the final journey to Windsor, will start early in the morning and last a large proportion of the day, so be very clear about how much time you expect people to watch.
• Depending on the way it is viewed, ensure that you have a TV licence if it is necessary.

Finally, and this may well be relevant to many employees, schools will be closed according to the Government’s announcement. This will mean that many parents will either have to make alternative arrangements for childcare, or be at home to look after their children.

 

The guidance provided in this article is just that – guidance. Before taking any action, make sure that you know what you are doing, or call an expert for specific advice. 

Since the start of the summer, we have seen a significant increase, at times we might call it an avalanche, in staff issues.

Many of these, if not dealt with properly in the initial stages, are escalating into more serious issues fairly quickly. One aspect that is becoming evident is that employees are becoming more strident in asserting what they believe are their statutory and contractual rights, although their understanding is often wrong.  They are also becoming far less tolerant in how they believe they should be treated, especially when picked up for failing to reach expected work standards or conduct.  And poor mental health is regularly put forward as an explanation for why they have behaved the way they have, usually blaming the employer for failing to support them.

And a number of factors are bringing this to ahead:

• A general shortage of talent and an excess of jobs are making staff more confident that they can find alternative employment if they decide to leave
• After the pandemic, everybody feels under more stress and over the past couple of years cumulatively their mental health has suffered
• Inflation is making us all worry about our jobs and income, and we are becoming more strident in protecting both
• A generally better educated workforce knows its rights, and some know how to “play the game”
• As a society, we are less tolerant of discrimination, even if it is no less common than it used to be
• The advice given out by certain advisory bodies, including ACAS, is not small and medium sized employer friendly

We are seeing a rise in cases across the board, but in particular

• Claims of bullying, harassment and discrimination
• Prolonged or frequent short-term periods of absences for mental health
• Health and safety, and/or whistleblowing issues
• Working from home and flexible working requests
• The correct calculation for average holiday pay and who is entitled to this

For us at BackupHR, the level of relentless and varied client issues this year is really noticeable compared with prior to the Pandemic.

We are concerned for our clients going into the winter that such claims and disputes will only increase, especially as the pressure on the entire population will continue to crank up as energy price rises really hit home.

Very often we are called just after the employer has made the first move, and not just before. And sometimes this complicates the situation, especially if the first move has not been a good one.

Typical mistakes that we observe some clients making are:

• Ignoring a stream of minor slip-up in procedures until suddenly people (either Management or employees) get fed up and want formal action
• Moving instantly to dismiss, or to making a snap and hasty decision
• Failing to document repeated conversations to employees about their behaviour, leaving no important written audit trail to subsequent rely on and for the employee to deny ever happening
• Not acting even-handedly and not giving all sides the opportunity to have their say
• Not following their own Disciplinary/Dismissal, Grievance or Dignity at Work procedures to name but a few that are sitting within their Handbooks
• In a tight labour market, wrongly thinking that dismissal is the easiest way to rid themselves of the problem
• Not spending sufficient time investing in good induction procedures for new starters
• Shying away from open and honest conversations about mental health and how well, or not, people are coping with work, personal and financial pressures

These are difficult stressful times for organisations, employers and their employees. Many of us do not know what the next two years will hold, and are fearful that whatever we have built up, is now at the mercy of a faltering economy and a turbulent world.

But, however well or badly the next two years turn out, employers can help themselves and their employees to avoid unnecessary, escalating disputes at work.

• Keeping new policies procedures and handbooks up-to-date, and issued to your staff
• Making sure that your Managers fully understand and know how to use the handbook contents properly, efficiently and in a timely way
• Communicating clearly to your employees, not only where you want the business to go, but that you will not tolerate disruptive behaviour of any form
• Confronting inappropriate conduct early on, rather than letting it get out of control
• Following your own procedures to the letter, and involving us in the very early stages, rather than when it has already got out of hand
• Not acting in haste, remember there is no such thing as instant dismissal, procedures still have to be followed even in open and shut cases
• Recognising that we all handle difficult work and personal situations differently, so that even if a person cites poor mental health, they are not immediately disbelieved, although if this is new news then a healthy degree of scepticism may exist, unless there is proper medical evidence to support such a claim
• Being seen to act even-handedly and fairly for all staff
• Leading by example

We understand that everyone is under pressure, we are feeling it ourselves. The positive side is we are about to increase the size of our BackupHR team, and we will continue to do so as demand for our services rises.

Just bear with us in the meantime, please remember that yours may not be the only urgent client problem we are dealing with.

 

 

The guidance provided in this article is just that – guidance. Before taking any action, make sure that you know what you are doing, or call an expert for specific advice. 

A recent Supreme Court decision on holiday pay has provoked much press, and considerable angst amongst employers, fearing that they could owe thousands in back pay.

Certainly, the decision in Harpur Trust v Brazel last week was an important one. After a 7-year legal battle, the Trust lost its argument that holiday pay should be pro-rata’d for a permanent worker (a peripatetic music teacher).

The good news for many employment experts is that it at least brings some certainty. The bad news for some employers is that it could leave them exposed to claims on back pay, as they have not been paying enough for holidays to employees that work term time only.

In reality, outside the education sector, not many workers will fall within the provisions of this decision. And, under normal circumstances, even if the Employment Tribunal subsequently finds against the employer, claims are generally limited to back pay for 2 years.

And, the decision does not affect part time workers, as it is widely accepted that the way most employers calculate their holiday pay is correct. That method is generally to pro-rata the time they work in either hours or days per week when calculating their holiday allowance. But, because they generally work regularly throughout the year, the calculation is the correct one.

What does the decision mean?

The worker in question was a music teacher who only worked during term time. To calculate her holiday pay, 12.07% was added to her pay at the end of each term.

How did they arrive at this particular figure? They simply calculated that the statutory 5.6 weeks holiday was 12.07% of a full 52 week working year. This has been a pretty standard calculation for many years.

She argued that though she only worked for 32 weeks a year, when work was available, the Working Time Regulations gave her 5.6 weeks holiday every year. The Supreme Court has agreed, while recognising the bizarre outcomes that this could cause – for example, in the highly unlikely situation of a worker on a permanent contract who only works one week a year could also be entitled to a full holiday allowance of 5.6 weeks!

They suggested that in reality, this was highly improbable. And we rather agree, especially as now employers should now look closely at contracts for such workers. They are known as part year workers, and such calculations will only apply if they are on permanent (what we prefer to call on-going) contracts.

Should employers do anything?

As this will only apply to a small fraction of workers, then the headlines that we have seen that this will have “Huge implications for HR” are rather too sensationalist.

We suspect that contracts in the education sector will rapidly adapt, as will pay levels to take into account these recent changes.

In most of the sectors, the effect will be minimal. But if you do employ part year workers because you supply the education sector or other seasonal sectors, then take good advice about your contract. There may be a nasty surprise lurking within there.

 

 

The guidance provided in this article is just that – guidance. Before taking any action, make sure that you know what you are doing, or call an expert for specific advice. 

A brilliant quote that was once sent to me by an Irish friend who had witnessed an argument between two colleagues. “There are three sides to any story, yours, mine and the truth”.

As a mediator who has frequently sat between two sides at loggerheads, nothing could be more accurate. And it is something that employers, Managers, HR, Trustees, Directors etc., and even those investigating workplace incidents of any description, would do well to bear in mind.

Because disputes, conflict and any differences of opinion on incidents that have happened will inevitably arise at work. This is not necessarily a bad thing. Those who feel passionately about what they are doing may come at a problem from a different angle. And, until both can agree on what the real story is, very often no progress can ever be made.  Two people may witness the same incident, but their recollection can be very different depending on how they feel and relate to the people at the heart of the matter.

So, always remember this saying when presented with a problem, especially some form of conflict. When somebody makes an accusation and somebody robustly defends it, there are three sides and the truth will often lie somewhere in the middle.

This is why we always say that accusations made anywhere are merely allegations until the evidence has been considered. And those who respond and vehemently deny these allegations are only presenting their side of the argument.

Your duty as an employer is to find out, as far as you practically can, where the truth lies, or at the very least, the balance of probabilities. Then, once you have established this as clearly and as certainly as possible, you need to act reasonably and sensibly in your response to the facts.

If the situation is serious enough and warrants it, hold a formal investigation. This is not to be done lightly – it is not necessarily straightforward, and could be quite time consuming, but it needs to be done properly. ACAS has a good guide and we have lots of practical advice and expertise too.

Before you even start, decide who will investigate. Establish the terms of reference and decide who needs to be interviewed. Give all sides the opportunity to explain themselves, ask others what has happened and carefully note down their responses.

In really tricky cases, you may need outside help. We have held plenty of such investigations, and the very fact that they are being carried out professionally and independently, often sends the message that matters are being treated very seriously.

But, however trivial the incident, however straightforward it seems, leaping to conclusions, making instant decisions off the cuff is never advisable. Even in seemingly the most open and shut case.

If you have not taken your time and drawn breath before acting, then if things ever come to a head in an Employment Tribunal, that chain of events will be looked at very closely. And, if there is one thing that Employment Tribunals hate, it is employers who act in haste, without factual evidence and due consideration.

It’s called acting reasonably and proportionally, based on the merits of each case.

 

 

The guidance provided in this article is just that – guidance. Before taking any action, make sure that you know what you are doing, or call an expert for specific advice. 

The Met office has issued extreme temperature warnings for the end of this week, and into next. It is important for employers to be prepared.

While no one can prevent such high temperatures, employers are under an obligation to mitigate the effect, where reasonably practical. And, with some news feeds predicting the heatwave could cause up to 2,000 deaths, such action is essential.

The Workplace (Health, Safety and Welfare) Regulations, 1992, lay down particular requirements for most aspects of the working environment. Regulation 7 deals specifically with the temperature in indoor workplaces and states that:

‘During working hours, the temperature in all workplaces inside buildings shall be reasonable.’

However, the application of the regulation depends on the nature of the workplace, such as a cold store, an office, a warehouse.  Whilst the Workplace Regs do state that the lower working temperature in a normal working environment is best not to fall below 16 degrees Celsius, there is no upper temperature limit.

Everything has been complicated further this year by rising energy prices, meaning that in some offices, in particular, some employers may be loath to turn on the air-conditioning. Which for a week or two, could be a false economy.

Most properly considered workplace risk assessments will include provisions for extremes of temperature, either very high or very low. If they do not already do so, pull out your risk assessment and make sure that you have provided for such conditions.  Also remember that everyone copes differently with heat, some lap it up while others wilt. Also, with high temperatures come high levels of pollen, so some people may really suffer from debilitating hay fever, even if they are normally able to manage the condition, so be aware of this too.

In addition, there are just some very practical steps that all employers can take.

• Ensuring access to drinking water for all employees, whether they work inside or outside.
• If normally only hot drinks are provided free of charge, purchase cold drinks and squashes to encourage people to stay hydrated.
• Where possible, provide shade for those working outside.
• Pulling down blinds and closing curtains where appropriate for those inside.
• Adequate protective equipment, particularly headgear, for those working in direct sun.
• Encouraging outdoor workers to use appropriate sun creams to protect themselves from long-term skin damage.
• Allow everyone to take slightly longer rest breaks if they feel that they are struggling with the heat.
• Adequate general ventilation (windows open to create an air flow) or air conditioning for those working inside.
• Relaxing clothing policies, particularly where staff are required to wear hot uniforms.
• Make sure those who have to wear PPE have regular breaks where possible.
• Allowing, where practical, different shift patterns for workers so they do not have to travel in the heat.
• Make sure that ice cubes are available in any canteen/rest room fridges for people to use.
• Allow more home working for those employees who can, and who feel their home working environment may be cooler and/or their journey into work by public transport would otherwise be really uncomfortable. Or whose hay fever means they would struggle to travel into work but may be able to do some work at home.

With climate change, scientists are predicting that such events will happen far more regularly in the future. It is best that employers remain prepared to protect their employees as much as possible for such eventualities.

As in all cases, it is the responsibility of employers to act reasonably and that may involve bending certain rules in such hot weather.

 

 

The guidance provided in this article is just that – guidance. Before taking any action, make sure that you know what you are doing, or call an expert for specific advice. 

Several cases recently published have underlined how easy it is for employers to do what they might think is the logical thing, only to find themselves unsuccessful in an Employment Tribunal.

In each of these cases, the cost to the employer has been substantial. This could be particularly damaging for a small organisation faced with a similar situation and outcome.

The first case was rather obviously a matter of wrongdoing. The case of Ms A Burns v Tralee Ltd and Mr S Sohal relates to a cleaner who worked in a care home, and was 5 months pregnant. The home had correctly done a Pregnancy Risk Assessment which highlighted the need for more regular breaks to sit down during her pregnancy.

However, the Management of the care home clearly thought that they were entitled to be critical of this pregnant employee. She was struggling to work quite as effectively as she did before because of her condition.

The Tribunal held that Management had refused to give her adequate breaks, and make reasonable allowances for her condition. They had criticised her for being ‘pathetic’ for asking for a five-minute break, which they refused. She was also accused of treating her pregnancy as an excuse not to pull her weight. And they pointedly removed her from a staff WhatsApp group.

This meant that the Tribunal awarded £25,000 against the care home, as she decided she could not face returning to work after her pregnancy, and the discrimination she had had to endure.

In R Sunderland v Superdry the damages were even more eye watering. Nearly £100,000.

The case involved a female worker again. This time, the Tribunal decided that for a number of years she had been denied promotion, and, she had an excessive workload imposed on her because it was known that she would not complain. The case heard that this was partly because, as a woman in her 50s, Management deemed her a ‘low flight risk’ and she was unlikely to leave the organisation “no matter how she was treated”.

So, Management reckoned that because of her age, she could not afford to leave the organisation, and so had no choice but to put up with seeing younger professionals being promoted above her. And, as a highly skilled designer, she was still expected to put up with an enormous workload.

In finding in favour of the Claimant, and making an award of over £96,000, the Judge said  “We find that the decision makers had decided not to promote her, and to subject her to an over-demanding workload with little or no real assistance, because she was an excellent designer on whom they could rely to create products that would sell well, and because they judged that there was little risk of her leaving the business no matter how she was treated.”

“We find that they probably thought this insignificant measure because of her age. We find that a similarly valuable designer who was significantly younger than the Claimant probably would have been promoted to Senior Designer or, later, to Lead Designer.”

Finally, and this case has, at the moment, been sent back to the original Tribunal for consideration again by the Employment Appeal Tribunal, Daley vs Vodafone Automotive Ltd is itself a case about an appeal.

Daley was dismissed for gross misconduct. He appealed the decision with the company and revealed, for the first time, at the appeal hearing that he had been suffering from depression and was on strong medication. This, he said, explained his abusive and obstructive behaviour.

The company dismissed his appeal and did not consider this latest evidence, as it was the first time he had brought it up. This was fundamentally wrong, the Appeal Court said, the employer has to investigate new evidence whenever it is revealed.

As a result, it has sent the case back to the original Tribunal to consider the evidence and decide what award, if any, should be made.

Learning Points

Tribunals are becoming increasingly intolerant of employers who behave unreasonably, even if it is only what some employers might consider to be ‘mild admonishment’, or, ‘a gentle exploitation’ of an older and steadfast employee.

Where discrimination can be proven, in one case of a pregnant worker, in another of a designer in her 50s who had clearly been over-worked and under-rewarded, awards can be very high.

Finally, appeals are meant to be genuine. So, if an appeal has evidence put before it, it cannot be dismissed simply because it was never mentioned before.

Even though it still takes a long time for a Tribunal to be heard, typically over 12 months from the time the claim is submitted, people continue to demonstrate an appetite to have their cases heard, especially in discrimination cases when they feel an emotional need for the actions of their former employer to be chastised and for them to be vindicated.

We tell our clients time and time again to treat people as you would like to be treated yourself, fairly, reasonably and with dignity.  We also remind them that there is little point having fine words within various policies if, in fact, they are not followed in practice.  And, always seek proper professional advice early on when you have employees you are concerned about, so that you do not end up making large pay outs.

 

 

The guidance provided in this article is just that – guidance. Before taking any action, make sure that you know what you are doing, or call an expert for specific advice.