Holiday Payment and Commission

The Employment Appeals Tribunal has confirmed, as expected, that commission payments should be included in the calculation of holiday pay.

Holiday pay should be based on ‘normal remuneration’ which should include variable elements like commission and non-guaranteed overtime. Holiday pay based solely on basic salary is likely to be an unlawful deduction.

However, the Appeal court did not clarify how the commission element of holiday pay is to be calculated. It could be based on a reference period of the last 12 weeks or the last 12 months.

A further court decision is needed to clarify this. The case in question has been referred back to the first Tribunal.

While the decision could have given rise to a huge number of back claims, employers have been protected. Recent regulations impose a 2 year time limit on claims for unlawful wage deduction after July 1, 2015.

In respect of historic claims, employees lose the right to claim if there is a gap of more than 3 months between unlawful deductions.

Therefore the advice to employers is to review their exposure to historic unlawful deduction claims and ensure that, notwithstanding the uncertainty on how to calculate the variable element, you revise your holiday pay calculations on a sensible basis until the issue is clarified.

Criminal Records Disclosure Scheme

Under the UK’s current rules on criminal records checks, convictions become “spent” after certain periods of time and employment applicants are no longer obliged to disclose them.

However, there are exceptions, mainly relating to roles that involve working with vulnerable people, where all prior convictions must be disclosed if there has been more than one previous conviction (no matter how old or trivial).

The UK court has decided that the “more than one” previous conviction is arbitrary and in breach of the European Convention of Human Rights. The Court has asked the Government to review the current rules in the light of this judgment.

At this stage, there is nothing specific for employers to do. However, it would be well to review current background check processes to see whether any changes may be required in the future.

Gender pay gap

If, on April 17th 2017, you employ more than 250 people in Great Britain under employment contracts subject to UK law, you will be required to publish information on the employee wage and bonus differences between the sexes.

For calculating whether members of a company group qualify, it seems that each company will be treated separately rather than aggregated.

You must publish mean and median pay differences; mean bonus differences; the proportion of male and female employees receiving bonuses and the number of males and females employed in quartile pay bands.

The first publication will be on April 30th, 2018 and then annually thereafter.