Jun 2014
4
Changes to Holiday Pay Calculations
As we enter the summer holiday season employers need to ensure that they are paying their employees correctly during annual leave.
A recent decision by the European Court of Justice (ECJ) will impact how some annual leave pay is calculated.
Do you pay employee’s commission? Is the commission calculated based on the amount of sales made or actual work carried out? If yes, according to the ECJ, holiday pay should include commission pay.
The decision was made in the case of Locke v British Gas Trading and Others. Locke was a Sales Representative whose commission made up approximately 60% of his remuneration. After taking two weeks leave in 2011, Locke suffered financially as he was unable to generate sales for the period he was on annual leave.
The ECJ ruled that the purpose of annual leave is to allow a worker to enjoy a period of rest and relaxation with sufficient pay. By not including commission payments with holiday pay, employees are less likely to take annual leave so as to avoid financial hardship.
It has been left to the national courts to determine how to calculate the commission to which a worker is entitled, however the court did suggest that taking an average amount of commission earned over a certain period, e.g. the previous 12 months.
Employers are advised to review their commission policies to establish which, if any, payments need to be included in annual leave pay.
Apr 2014
9
UK Employment Law Update
The new tax year sees a number of changes in the area of employment law. These include:
Early Conciliation
From 6th April claimants should send their dispute details to ACAS first before going to a tribunal. From 6th May this step will be compulsory. ACAS will endeavour to conciliate a settlement, although both parties may opt not to participate in the process, in which case an Early Conciliation Certificate will be issued and the claim can proceed to tribunal.
Employing Illegal Immigrants
The maximum fine which can be issued to employers found employing individuals who do not have the right to work in the UK has been increased from €10,000 to €12,000.
Financial Penalties on Employers
Tribunals will now have new rights to issue penalties to employers in breach of employment rights maliciously or recklessly. Penalties will be in addition to any compensation due to the employee, they will be payable directly to the Secretary of State and may vary between £100 and £5000.
Removal of Statutory Discrimination Questionnaire
The questionnaire by which an individual can obtain information about potential discrimination from an alleged discriminator is removed.
Statutory Rates and Compensation Increase
From 6th April statutory sick pay (SSP) increased from £86.70 to £87.55. The Percentage Threshold Scheme which allows employers with relatively high levels of sickness absence to recover a percentage of statutory sick pay is also ending.
Statutory maternity pay (SMP), statutory paternity pay (SPP), and statutory adoption pay (SAP) have all increased from £136.78 to £138.18 since 6th April.
For the purpose of calculating statutory redundancy and basic award for compensation, a “weeks” pay has been increase from £450 to £464. The maximum compensatory award from unfair dismissal rose from £74,200 to £76,574.
Bright Contracts – Employment contracts and handbooks.
BrightPay – Payroll & Auto Enrolment Software
Dec 2013
19
Employers facing increase in sick pay costs!!
From 6 April 2014, employers will no longer be able to recover payments made for Statutory Sick Pay (SSP). HMRC has made the decision to abolish the Percentage Threshold Scheme (PTS), which is the scheme in place to provide SSP compensation for employers.
Currently an employer is entitled to recover some of the SSP paid to their employees if the total SSP paid in a tax month is greater than a set percentage of their gross Class 1 NICs (employers’ and employees’) liability for that month
Although PTS is being abolished from April 2014, employers will still be able to make claims for reimbursement of SSP under PTS (paid for sickness periods up to 5 April 14) until the end of the 2015/16 tax year.
In addition, the associated SSP record-keeping requirements will also be abolished at the end of 2013/2014. However, employers will still be required to maintain records for PAYE purposes and to demonstrate they are meeting their SSP obligations.
The decision to abolish PTS was made as a result of an independent review which found that the current scheme does not support the proper management of sickness absence in the workplace.
The Government has therefore decided to reinvest the money in a new Health and Work Service (HWS), due to be introduced by the end of 2014. The aim of this service will be to:
- help employees who have been on sickness absence for four weeks or more to return to work,
- support employers to better manage sickness absence among their workforce,
- give GPs access to work-related health support for the patients.
Employers, who want to avoid being faced with increasing costs, need to look carefully at how they manage sickness absence in their workforce. The first point of action will be to implement, or review, the company sickness policy.
