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Tribunal Judgement - Holiday Pay

8 December 2014

Members will no doubt be aware of a recent judgement in the European Court of Justice and an Employment Appeal Tribunal judgement which published conclusions on three outstanding cases.

These decisions ruled the following:

  • Where a worker’s pay ordinarily includes commission, his/her salary should not be reduced to basic pay in periods of annual leave, because she/he has been unable to earn commission while on annual leave.
  • Workers have a right to average remuneration for holiday pay including overtime, where the worker may not be guaranteed overtime, but is required to do it, when the employer requests it.

Although these cases are welcome extensions to workers’ rights to holiday pay, and could have significant impact on our members working in the telecoms and financial services sector, there are still a number of uncertainties and areas on which further guidance will be required from the Court.

If we are to pursue any claims the member is subject to a time limit and I believe any claims must be made within three months of the last series of wrongful deductions. ie: the date that the correct payment was due to be paid. Any Employment Tribunal Cases on the back of the ruling are being suspended from proceeding by the Employment Tribunal System pending the outstanding issues which are likely to go to appeal on:

  • The correct reference period for calculating the average pay eg: 12 weeks or one year.
  • Payments to be included in the calculation – ie: other allowances that are intrinsically linked to average remuneration.
  • How far back these claims can go – the current ruling is - if there is a break of more than three months between deductions, this would limit how far back the claim can go.
  • Will workers be entitled to amend a claim to include further shortfalls in holiday pay after their claim is made?
  • Position in relation to zero hours contracts.
  • Position in relation to other atypical workers such as shift workers.

CWU National Officers have been asked to engage with their companies this week, to ascertain what legal advice they are taking and how they intend to adjust their holiday pay to take into account additional elements of members’ remuneration, including overtime.

We are also currently deciding how the Union deals with this in order that we have a common approach on this matter.