The Government first announced plans for a shared ownership right to buy in October 2019. At the time the sector raised concerns about the impact the plans would have on housing associations ability to borrow. An election and a pandemic later the Government announced, during the CIH Housing Festival last week, the return of the right to shared ownership as part of its Affordable Homes Programme (AHP).
How far should the decision lead you to change the approach to the calculation of holiday pay where overtime, premium payments and commission may be paid to your workforce? This issue is also relevant to the workforce of contractors, joint ventures and trading companies with whom a Council may be engaged. Care needs to be taken when drafting TUPE clauses that cover this issue.
Under UK law, a worker is entitled to 5.6 weeks' (28 days) annual leave in each leave year, made up of 4 weeks' EU entitlement and an additional 1.6 weeks' granted by UK law. On top of this, it is not uncommon for employers to allocate further days of holiday on a contractual basis to employees. Whilst legislation confirmed that holiday pay should be based on a week’s pay, it did not historically set out what should be included within that payment. UK law was therefore at a point where workers were paid based on a week’s ‘normal remuneration’. Overtime and commission were not historically viewed, and therefore not calculated, as part of ‘normal pay’ for a worker.
The case of Bear Scotland v Fulton changed this. It is now accepted that ‘normal remuneration’ can include payments for overtime which a worker is required to work, but which an employer is not obliged to offer. Further, and more importantly, overtime should also be taken into account when calculating a week's pay when payments for such overtime form part of ‘normal pay’.
As the decision impacts most upon those who have normal working hours but receive a variation in their pay, perhaps because of the type of work carried out or where they work more than their contacted hours, it is crucial to determine what is regarded as ‘normal pay’ to ensure the correct and consistent approach to the treatment of such payments. The impact of the decision turns on the assessment of whether the work is regarded as:
- guaranteed compulsory work (where any payments for that work, including overtime pay, commission or bonus earned, must form part of the holiday pay as these payments are regarded as normal remuneration and intrinsically linked to the performance of the tasks which the worker is required to carry out);
- non-guaranteed compulsory work (where any payments for that work, including overtime pay, commission or bonus earned, must form part of the holiday pay, but the calculation is dependent on thereference period the employer chooses);
- voluntary additional work (where overtime payments should be included in holiday paywhen that overtime forms a ‘settled pattern’ for workers, or when payments are made to workers so frequently that it could be deemed to form part of normal pay; or
- sporadic overtime arrangements with no regular pattern (where it is possible to argue that payments are not settled, nor regular and therefore should not be included).
It will also be worth assessing whether there has been a break of more than three months between successive underpayments, potentially limiting back-pay liabilities.
On the back of the judgment therefore, going forward, it will be important to give careful consideration to the individual circumstances of overtime, on call or bonus payments made to consider whether holiday pay arrangements could come under close scrutiny, particularly by employers who may be assessing their holiday arrangements following the ruling. Whilst it is anticipated that Regulations from the government are likely to limit underpayments to the last two years, these Regulations are not expected to come into force until 1 July 2015 and immediate action is advisable.
For more information
Contact Kate Watkins.
Two final pieces of the possession jigsaw have been published on 15 September 2020. Mr Justice Knowles’ working group on possession proceedings has issued its guidance on the “overall arrangements” for possession proceedings.
One change proposed by the Building Safety Bill is the introduction of a duty holder regime, which will see statutory responsibility for the safety of higher risk buildings placed on key individuals
Throughout this pandemic, the Competition and Markets Authority (CMA) has been publishing various “Statements on Coronavirus” (Statements) which provide guidance on consumer rights during this time.
A recent increase in COVID-19 cases in the UK means new measures are being put in place in an effort to reduce the risk of a second wave. Whilst the impact of COVID-19 continues to be felt, it is important to remain focused on the sector’s road to recovery.
Sometimes half an hour at a conference gives you the reality that has been staring you in the face all along. That was my experience watching “Change is on the Horizon”
Following our recent e-briefing on Possession Notices, Helen Tucker and Emilie Pownall from our housing litigation team discuss the impact of the changes on social landlords.
Not only has the possession stay been extended until 20 September, the notice periods to be given to tenants has been extended in certain circumstances with some important exceptions.
The Court has confirmed that a party cannot withhold its consent in order to re-write the original bargain.
Following the Grenfell Tower tragedy, building safety continues to be a key concern for social housing providers and their residents.
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