Lawrence of Arabia Makes Surprise Contribution to UK Holiday Pay Debate
There is a line in, I think, Lawrence of Arabia where a terrified young soldier trapped under fire with a small group of his colleagues asks Peter O’Toole as Lawrence what they are going to do. “Nothing”, drawls O’Toole languidly, “After all, it’s generally best”.
And so by a tenuous little link to the question of amending your holiday pay calculations to reflect the new jurisprudence around including an allowance for overtime and/or commission. Have you been sitting in your office wondering why no one seems able to tell you exactly what you need to do? Have you been approached for a deal by your union on the basis that everyone else has sorted it out and only your company still has its head over the parapet?
You are not as alone as you may feel. A survey of over 1,000 companies of a wide variety of sizes, sectors and employee representation structures provides the answers and a number of interesting statistics:-
Of all respondents, a full 73% have yet to take any steps to amend their holiday pay calculations. Those union claims may perhaps be taken with a pinch of salt.
Of the 27% who have changed their holiday pay arrangements, only a small majority (less than 60%) have unionised workforces.
Where changes to holiday pay include use of a reference period, the period invariably picked has been twelve weeks. That is even though that period has yet to be enshrined in law and even though those responses came from sectors as diverse as construction, aviation, retail and banking. Employee numbers in those businesses ranged from less than 100 to over 45,000. It therefore appears that for all the uncertainties and injustices both ways which such a reference period can generate (and despite the enormous spread of overtime and commission schemes in use over that population) twelve weeks will likely be the default position for voluntary holiday pay agreements.
Where respondents have reached agreements with their workforces about alterations to holiday pay calculations, these have all been forward-looking. None of respondents refer to any accommodation being reached in relation to any notional arrears.
The principal factors leading to changes in those 27% of employers were (i) awareness of the case law (i.e. the perceived inevitability of having to do something at some stage) followed by (ii) union/employee pressure (though of the 73% who had made no change, only one admitted to receipt of a Tribunal claim), and (iii) brand/reputational factors.
Where changes have been made, half had applied them to the full UK 5.6 week holiday entitlement. About a quarter of respondents had limited the changes to the Working Time Directive four week minimum and a further quarter did not specify which.
Of those cases where changes had not been made, nearly 85% of employers had also taken no steps to amend their commission/overtime structures to minimise the scope for employee claims.
So in other words, whether or not it is generally best, doing nothing does seem thus far to be the principal employer response to the holiday pay question. There are good objective reasons to support such a stance at this point, including in particular the absence of Government guidance, the uncertain direction (in matters of detail, at any rate) of the case law, and the relatively limited number of unions willing to undertake the colossal logistical exercise of collective Tribunal claims. There is no reason to expect much change in the first two factors in the near future, but whether that last point will remain valid if employer indifference persists at such a high rate is an open question.
© Copyright 2015 Squire Patton Boggs (US) LLP