Do you remember when holiday pay used to be simple? Are you confident with your holiday pay calculations? Read more in this month’s People Matter newsletter from the HR Dept.
People Matter July 2019
The empty spaces in the car park are proof that the holiday season is in full swing. And with it our HR advice phonelines are getting busy answering all the questions about holiday pay.
The first question is always: how much holiday should an employee have? The statutory minimum is 5.6 weeks, made up from about 20 days plus the bank and public holidays. And zero-hour staff accrue holiday for every hour worked, 8.3 hours worked equals one hour’s holiday.
Pay used to be relatively simple, with an employee’s weekly salary or usual weekly working hours being the amount they earned whilst on holiday. But over the last two years all that has changed.
The first challenge was Lock v British Gas. He wanted his results-based commission included in his holiday pay. He won and that started the change. A survey recently found that workers in Britain were owed £1.8bn in unpaid holiday pay and the government is campaigning to ensure employers and employees understand their rights and obligations.
Holiday entitlement is part of the health and safety legislation. It is there to protect staff on the basis that we all need a break from work for our health and well-being. Therefore there must be no disincentive to take that time off. This might be the case if someone’s pay was less during periods of annual leave.
This has resulted in a number of claims. First for compulsory overtime to be included. And now firefighters have won the right to have voluntary overtime included too in the average week’s pay. This is in addition to payments such as on call and commission.
Staff working irregular hours should have the average pay calculated over the previous 12 weeks. And do remember that holiday must be taken. So paying an additional amount each week to cover the holiday pay, which is referred to as rolled-up holiday pay, is not allowed.
Restrictive covenants offered protection by Supreme Court
A dark cloud had been hanging over many businesses which rely on restrictive covenants. But it has passed following a Supreme Court ruling.
As you’ll probably know, restrictive covenants are used to stop employees competing against you after they leave, or poaching key staff and clients from you. What you may not know is that a restrictive covenant must be reasonable and not be so restrictive that a person is prevented from earning their living.
A former director at an executive research firm argued that some wording in her restrictive covenant was unreasonable, making the whole clause unenforceable. Her former employer successfully obtained an injunction preventing her from joining a rival, and some expensive toing and froing in the courts has followed.
It centred on two words: “interested in”. She had signed to say she would not “directly or indirectly engage or be concerned or interested in any business carried on in competition [with her former company] for six months after leaving the business”.
As those words prevented her taking even a minor shareholding in a competing business, the Court of Appeal ruled it an unreasonable restraint of trade. And they found that removing the words would change the meaning of the clause.
Now the Supreme Court has found that those two offending words can be removed – but leaving the overall effect of the restrictive covenant intact, without the need for words to be added or amended.
This sets an important precedent and safety net for employers: that a restrictive covenant can be generally enforceable, despite one aspect being deemed unfair. However, having them correctly drafted in the first place is essential and having insurance in place to be able to enforce them through the Courts brings better protection for your business.
Until next month!
The HR Dept Cambridgeshire & North Herts
Local businesses throughout Cambridgeshire, run by people like you, outsource their HR because it is easier and more cost effective. We tell you what you can do, not what you can’t. We are here to give you practical and sensible help to sort out problems whenever you need us. When you are thinking about how to grow for the future, we can help you put together the ‘people plans’ to enable you to be even more profitable tomorrow.