Work it: HK Employment – September update In this month's round-up of key employment and HR developments, we look at: • • • • •
Holiday pay: inclusion of voluntary overtime Auto-enrolment: 5 top tips (guest post by Rosalind Connor at ARC Pensions Law) Apprenticeship levy What's on the horizon? HK Employment in the news
Holiday pay: inclusion of voluntary overtime Following several recent cases concerning holiday pay calculation, we now have the first English Employment Tribunal decision on whether purely voluntary overtime pay needs to be included. The decision is not binding on other Tribunals but it confirms the approach Tribunals are likely to take. The answer is, as anticipated, that overtime pay does need to be included in the calculation of holiday pay if it is part of the individual's normal remuneration. So, if a worker carries out overtime regularly, it should be included in the calculation whereas it does not need to be included if a worker carries out overtime very rarely. However, because these rules come from EU law, this only applies to the four weeks of annual leave guaranteed under EU law (which are deemed to be taken first in each holiday year). Voluntary overtime pay does not need to be factored into holiday pay for the remaining 1.6 weeks' leave required under UK law or any further contractual holiday entitlement (unless there is a specific provision in the employment contract requiring this). In the meantime, British Gas has appealed against a previous ruling that commission payments need to be factored into holiday pay in the same way. The appeal was heard by the Court of Appeal in July and judgment is awaited. If the appeal is unsuccessful (as many anticipate) and the case is finally resolved, it may provide some helpful practical guidance on how to calculate holiday pay when commission needs to be factored in. If you would like to discuss how your business should address holiday pay issues, please contact Jane Amphlett or your usual Employment team contact.