I’ve sat at my desk in Inverness over the last few weeks looking at terrible weather – snow, hail and horizontal rain. I’ve been reminded that summer and sunshine should just be around the corner. Accordingly, my thoughts have turned to holidays.
In the past the most difficult decision was whether this year’s vacation would be in Nairn or a more exotic far flung destination, perhaps Oban or Dunoon. As an employment lawyer, however, I now know that such crucial considerations have been trumped by an even trickier dilemma, namely how on earth do we go about calculating an employee’s holiday pay?
The difficulty arises from European Court decisions with our friends in Brussels making it clear that to be EU compliant pay for an employee’s minimum holiday entitlement (in this case four weeks) should reflect normal earnings. In the UK, however, practice has been that, for staff with fixed core hours, statutory holiday pay was based on basic pay. This meant that any additional payments an employee may typically receive such as voluntary overtime and commission were ignored in the calculation.
Was it the influence of UKIP or sheer bloody mindedness that caused UK employers to depart from the continent? The answer is in fact simpler. UK employers were doing precisely what the domestic legislation on holidays said they were obliged to do.
Surely one thing we can rely on is that if we faithfully abide by the letter of the law, someone cannot retrospectively move the goal posts and tell us we have broken the rules? Unfortunately, as anyone who has been following the press coverage on holiday pay will know, that is precisely what has happened to many employers who now face damage claims suggesting they have under paid holidaying staff.
How did this happen? (Euro sceptics may wish to look away now). UK legislation, in focussing on basic pay, has been held to be inconsistent with a wider European Law. This has lead courts to, in effect, rewrite the UK rules to make them consistent with the European approach. Bizarre as it may sound, this means that what the legislation used to say is not what is says anymore. If that was not confusing enough, as courts only deal with the precise issue in front of them, their rewriting of the legislation is being done on a piecemeal basis as opposed to there being any comprehensive review of how to calculate holiday pay.
Such uncertainty helps no one. The best way to bring much needed clarity would be for the Government to issue new and EU compliant legislation. I may have missed it but as far as I am aware the technical difficulties in calculating holiday pay did not form a major part of any of the parties’ pre-election manifestos. Although the direction of travel is clearly towards holiday pay reflecting average earnings, employers are still left waiting for detailed judicial guidance. This could take years.
This issue continues to be on our radar and I will return to this subject. I can however be more definite on one other holiday related issue. After careful consideration, it is going to be Oban this year.
Kirk Tudhope is a partner at Scottish law firm Ledingham Chalmers.
Kirk specialises in employment, TUPE, equal opportunities, freedom of information and data protection.
Kirk has advised employers on employment law for 20 years and heads the Ledingham Chalmers employment team.
He oversees the conduct of litigation and retains an interest in advising on Health and Safety related litigation and Fatal Accident Inquiries.
Kirk was described in the 2012 edition of Chambers and Partners as “seen as a leading voice on employment issues in the Highlands”.