So this week I’ve been talking to top employment law expert Nic Elliot, a Director in the employment team at Actons Solicitors, who’s right on top of the latest of what’s coming out on this topic from Europe.
What’s it all about?
This is all stemming from a couple of employment cases involving British Airways and British Gas, where it was decided that employees shouldn’t be worse off when they are on holiday. So we’re talking about staff who would usually earn commission, overtime, shift allowances, weekend premium rates etc, but who don’t get these payments because they aren’t at work.
The case involving commission decided that the sales employee should have received an average of their commission. However Europe have not yet issued details of how this should be calculated, leaving a nice fuzzy area for businesses to cope with! Similar cases involving overtime and other payments are still going through, but based on how pro-employee recent decisions have been, the experts are expecting it to go the same way and become law soon.
Does it affect you?
Yes it’s likely to affect you if you pay any of your staff commission, overtime, or things like shift allowance, call outs or other premiums for working certain times.
And what is the risk?
The risk to your business is two-fold; firstly there’s the ongoing extra cost you may have to pay your staff to comply with this new legislation. More worryingly, and expensively, your staff could potentially make a backdated claim going back as far back as 1998 for pay they should have received when they were on holiday.
The unions are already contacting their members to let them know about it, and PPI style claim companies are popping up already only too keen to tell staff how to get more money out of you.
What should you be doing then?
- This is really important – DON’T ignore this as it could be a pretty big liability.
- First step is to audit all of your pay types – how many pay types do you have, how much of your employees pay is made up of these elements.
- Then get some advice on exactly which pay types are likely to be caught by these changes and work out just what your historic liability could be. This can be tricky to work out so do get some advice from Nic if you need to.
- If you’re worried you could have a significant historic liability on your hands, you do need to take advice.
- Check your company insurance policy, as you may find you’re covered for the cost of defending these sort of claims.
What can you do about it?
There are certain ways that you can structure pay going forwards to try and make this cost neutral to your business. There also things you can do to mitigate the backdated risk – these things depend entirely on your business, the types of pay you have and the extent of your possible liability.
The best advice I can give is make sure you get professional advice and don’t wait for this to become a big issue- this one isn’t going away.
So talk to your employment advisor, or get in touch with Nic at Actons. He’d be delighted to help you. You can get in touch with Nic on 0115 910253 or drop him an email here