Many people will be gearing up for the annual summer holidays, which is a time to relax and spend time away from work.
But how many of those people, including employers, are properly aware of what the legal implications of holidays and holiday pay are?
As we head into peak holiday season, Wake Smith employment solicitor Mark Serby looks at what the UK legal requirements are for holiday pay.
"It is important that consideration is given to holiday pay because it affects every employee and every employer and there are points within our legal system which many will be unaware of.
"The statutory minimum amount of time allocated to an employee is 5.6 weeks under the Working Time Regulations. This is four weeks plus eight public holidays.
"A minimum of four weeks must be taken within a holiday year, but the other eight days can be carried forward by agreement if the contract of employment gives allowance for this.
"Equally, as this is a minimum requirement, a contract of employment may allow for a more generous holiday allowance. There is no ceiling on what holidays employees may be entitled to if it is agreed through an up-to-date contract of employment.
"Getting rates of holiday pay right is an area where many employers fail in their duty. According to some recent tribunals and courts, employers who pay commission or bonus payments have been getting it wrong when it comes to sickness and holiday pay.
"In 2015, the Bear Scotland v. Fulton case, an Employment Appeal Tribunal looked at the question of overtime payments and was critical of employers who were paying basic pay during holiday periods without considering how overtime payments should also fall into that calculation.
"In another case, Lock v. British Gas, Mr Lock was a salesman, paid a basic salary plus commission based on the number and type of contracts he persuaded customers to enter into. However, when he took holidays he was only paid basic salary plus any commission which he had earned prior to the holiday period. Since he was on holiday, he could not earn any commission, and it was that which formed the dispute.
"As a result, holiday pay should include the quoted rates of normal pay, plus: any commission payments, incentive bonuses and overtime that workers are required to perform. Regardless of whether it is guaranteed, overtime premiums should be taken into account.
"Also, payments that relate to the 'personal and professional status' of workers, such as those based on seniority, length of service or professional qualifications, productivity/performance bonuses, shift allowances and premiums, standby payments and payments for emergency call-out duties, travel and other allowances that are treated as taxable remuneration must be included.
"Sickness whilst on holiday is another often misunderstood matter. The purpose of holiday is to relax, therefore if an employee falls ill on holiday and has a doctor's sick note then they can ask the employer to either reinstate the holiday entitlement or to reschedule the holiday.
"In all of these instances and many more, the employer has an obligation to understand and demonstrate their legal requirements and unfortunately, many do not – particularly smaller businesses which are not well versed on employment responsibilities."
For further information on holiday pay please contact Mark Serby on 1004 224 2048 or at [email protected]
