Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
Many employers who engage workers on atypical arrangements, where they work more than their normal contractual working hours and receive additional pay over and above their standard pay, were left concerned about the implication of this decision (see our briefing). Many employers also decided not to make changes to their holiday pay arrangements, understanding that British Gas intended to seek leave to appeal to the Supreme Court, which could reverse the Court of Appeal’s decision.
The Supreme Court has now considered British Gas’s application to appeal against the Court of Appeal’s judgment, but has refused permission. This means we have reached a point of finality on this issue of principle and contractual results-based commission is to be taken into account when calculating holiday pay.
What is still not clear is how holiday pay in such circumstances is to be calculated and what the appropriate reference period is for the calculation.
It has been reported that the Employment Appeal Tribunal (EAT) will decide on these outstanding matters in March 2017. Only after that decision is given will we hopefully have the full clarity about how to calculate holiday pay for those with varied earnings.
For further information
To find out more about the impact this decision could have on your business, or to purchase a copy of our Holiday Pay Toolkit (which (i) summarises the current legal position; (ii) answers the most frequently asked questions about the impact of the judgment on existing holiday pay arrangements; (iii) and suggests potential solutions for how to calculate holiday pay and deal with any potential liability for any historic underpayments) please get in touch with your usual contact at Anthony Collins Solicitors or speak to Anna Dabek.
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