Holiday pay back in the spotlight, collective redundancy consultation rules assessed, and statutory pay rates rise
| Holiday pay back in the spotlight, collective redundancy consultation rules assessed, and statutory pay rates rise | ||||||||
| The Lock case returns to a UK tribunal and the European advocate general decides on the meaning of ‘establishment’ in the Woolworth’s case | ||||||||
| Holiday pay | ||||||||
| The case which looked at whether commission should be included in holiday pay, Lock v British Gas, has returned to a UK employment tribunal following a decision by the European court. The tribunal now has to decide whether UK law can be interpreted in line with the court’s ruling, although its decision is not binding on other courts and may be appealed. | ||||||||
| The case involved a salesman whose pay was made up of 60 per cent commission. When he was on leave he earned no commission. He claimed this would decrease his future holiday payments. | ||||||||
| The European court has confirmed that holiday pay needs to reflect “normal remuneration” and should put workers in a position which is “comparable to periods of work” as regards salary. So where commission is a significant part of workers’ wages, it needs to be included in holiday pay. | ||||||||
| Colin Smith, an employment partner at law firm Brachers, commented “What is clear is that EU law requires commission and bonus earnings that are intrinsically linked to the work done by a worker to be factored into EU law holiday pay (the basic four weeks out of the UK’s 5.6 weeks’ entitlement). Whether this EU principle can be shoehorned into the current wording of the Working Time Regulations is unclear. This whole area, including overtime, is crying out for proper legislative intervention to bring clarity for employers as to what holiday pay should be and how it should be calculated.” | ||||||||
| Redundancy consultation | ||||||||
| A legal opinion from the European Advocate General has been given on the collective consultation for redundancy case, USDAW v WW Realisation 1. The case, which has been linked with two others for the opinion, stems from the closure of Woolworth’s stores and was heard in the Employment Appeal Tribunal in 2013. It has been referred to the European court by the Court of Appeal over whether UK consultation requirements, triggered when 20 or more redundancies are being made “at one establishment”, refers to individual work locations (shops, in this case) or the whole business. | ||||||||
| The opinion, which may not necessarily be followed by the CJEU, suggests that ‘establishment’ does mean individual workplaces within a business. Emma Zarb, employment lawyer at Taylor Wessing, said: “This is good news for employers. Should the ECJ follow the Advocate General’s opinion, businesses will be able to revert back to the standard approach taken since the seventies, and look at any planned redundancy in isolation.” | ||||||||
| But Sarah Rushton, a partner at solicitors Moon Beever, urged employers to remain cautious about the opinion.She said that although it suggested that the pre-Woolworth’s position may prevail “matters are not entirely clear cut as the Advocate General also observed that it is conceivable that several shops operated by one employer within one shopping centre may be regarded as one employment unit, and that it is not necessary for an employment unit to have financial or administrative autonomy in order for it to be regarded as such.” | ||||||||
| Nick Dent, employment partner at law firm Clyde & Co, said that the purpose behind the European collective redundancies directive is “arguably to protect local communities from the impacts of mass redundancies in that area. Employers have actually for the last year and a half been living with case law that says they have to look at redundancy plans across all their sites when calculating whether they hit the 20-person threshold for consultation. For large employers this means they would have constant consultation obligations, and many have been quietly ignoring the Woolworths case and only consulting locally where there are 20 or more redundancies at one site – without much objection.” | ||||||||
| Matthew Smith, a partner in Blake Morgan’s employment law team, said the opinion would come as a “great relief to many employers. The opinion stresses that it’s the local impact of proposed redundancies which is important, which is why it’s the number of affected staff at the local store or office which counts. Employers going through redundancy exercises will still have to consult their staff on an individual basis but the opinion suggests that, in many cases, they will be spared the formal requirements of collective consultation, such as the need to elect and consult with employee representatives. Importantly, they’ll also not need to worry about the significant financial impact of large ‘protective awards’ for failing to consult collectively”. | ||||||||
| Other cases to watch | ||||||||
| Law firms are recommending that employers keep their eye on a number of cases this year which have implications for the way they manage their businesses. These cases, which are all to be heard in the Court of Appeal, include: | ||||||||
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| Statutory pay rates | ||||||||
| The government has announced increases to the statutory pay rates (see the Welfare Benefits Uprating Order 2015). Statutory sick pay rises from £87.55 to £88.45 on 6 April 2015, and statutory shared parental, maternity, paternity and adoption pay rises from £138.18 to £139.58 on 5 April 2015. Shared parental leave and pay becomes available to the parents of babies due, or of children matched for adoption, on 5 April. All statutory shared parental pay will be paid at the lower rate of statutory maternity pay – there will be no initial six week enhancement as available under the statutory maternity pay provisions. | ||||||||
| Tribunal compensation limits, on a week’s pay for calculating statutory redundancy pay and the basic award for unfair dismissal, should come into force in the first week in April, although the new rates have yet to be announced. | ||||||||
| Dates for your diary | ||||||||
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