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Ben Jones
Ben Jones, UK Lawyer
Category: Law
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Experience:  Qualified Solicitor - Please start your question with 'For Ben Jones'
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I am very confused about the current 'holiday pay' debate

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I am very confused about the current 'holiday pay' debate in England.
My background is in HR but I was asked a question by a local nursery school my son attends which I was unsure about. The situation is that the support staff have contracts which guarantees them 8 hours a week of work (a lot of the support staff are parents who want flexibility and this was originally, on business start up, a conservative estimate of what would be required). In reality, they are frequently working up to 18 - 20 hours a week but this is purely on a voluntary basis and there is absolutely no obligation to work the hours i.e. the staff have the right to refuse work above 5 hours with no recourse at all. I know that there was a case in Ireland which said that regular voluntary overtime should be included in calculating holiday pay and the implication was that ultimately it was likely to be the case in the England at some stage. It appears, however, that this is decided on a case by case basis so I'm a little stuck. As a 'reasonable employer' and one with history of working hours now, I do think it is wise for the contracts to be adjusted to reflect an increase in hours but still allow flexibility if demand drops. Do you think this is a reasonable approach and if the contractual hours increased, would the nursery have to backdate holidays? Thank you for your views. Rachel
How long have you worked there?
Customer: replied 1 year ago.
I don't - the staff have all worked there for over 2 years. I'm just trying to support a local business from my HR perspective. I am an HR/Business Consultant.
Customer: replied 1 year ago.
P.S. I had meant 8 hours not 5 above...
Hello, my name is ***** ***** my colleague has asked me to assist with your query as it is more my area of law. Would the employees be willing to accept the changes? I am just travelling now but will reply later today thanks
Customer: replied 1 year ago.
Yes they would. I feel it's appropriate to adjust the contractual hours to reflect more of the reality and at the moment they are guaranteed only 8. I do understand that the business needs also change depending on how many children come in at any time (it's a private nursery). My 'gut feel' would be that if the support staff are working usually approx. 18 hours at the moment, that to 'up' their guaranteed hours (which would obviously attract holiday pay) to 12 or 14 would seem reasonable whilst retaining the flexibility if necessary for the managers to reduce from 18 if necessary. The big question is how holidays would be treated. If the manager does this from now (and she does want to do the right thing - it certainly wasn't a 'money saving' approach or a way to avoid holidays), would she need to back date or could she just start from the time the contracts were changed? Also, if she did this, I am then assuming that any additional voluntary overtime from this new 'more reasonable' level wouldn't fall under eligibility for holiday pay? Thanks's such a grey area!
Thanks for your patience. One thing is entirely correct – it is a rather grey area and one which is still evolving. As far as the law can be currently interpreted, if a worker is entitled to overtime pay when working for "more than a fixed number of hours in a week or other period", the worker is treated as having normal working hours equivalent to the fixed number Until recently it was accepted law that overtime is only included in normal working hours where it is both guaranteed and compulsory (so that even if the worker is not called on to work it, the employer is liable to pay them for it). Overtime that is regularly worked but is not guaranteed (that is, the employer is not contractually obliged to provide it) is excluded from the calculation of a week's pay. However, recently there were a couple of landmark decisions in the European Court of Justice in the cases of William and Lock, followed by the case of Bear Scotland in the Employment Appeal Tribunal. Whilst it provided some clarity, it still leaves some unanswered questions and the position is still far from crystal clear. It basically stands that when calculating holiday pay the employer should take into account any overtime worked by the workers, not just guaranteed and compulsory one. Voluntary overtime, where a worker can choose whether to work it and there is no obligation on the employer to provide it, is likely to be the most common form of overtime in the majority of sectors. Whilst the EAT did not reach any definitive conclusion on this type of overtime, it is possible that tribunals will in the future interpret voluntary overtime as forming part of normal remuneration if a settled pattern has developed over a sufficient period of time. As to backdating payments, the employer may be required to do that but he employees can only go back for a maximum of 2 years, so the claim will be limited. I hope this has answered your query. I would be grateful if you could please take a second to leave a positive rating (3, 4 or 5 stars) as that is an important part of our process and recognises the time I have spent assisting you. If you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you
Customer: replied 1 year ago.
Hi Ben,Thank you very much for coming back to me. So basically, there is no legal obligation to increase the contractual or guaranteed hours beyond what they are at the moment i.e. 8 and the additional voluntary hours (albeit pretty much regular) do not currently count towards holiday pay? I have interpreted that correctly?I guess the next question is that if we think that the inclusion of voluntary overtime into holiday pay will come eventually, by raising the hours now to fit what is more of a reality, we could be avoiding the risk of anyone making a claim in the future?It's a small business so I think to give them options is my preference i.e. do nothing and wait until there is more clarity but be prepared for the implication if that happens OR try to minimise the risk of a claim when (and it's likely to be when) regular voluntary overtime becomes something to include in holiday calculations by adjusting contracts now and reducing the likelihood of an issue. The gap between 8 hours and 18 regularly feels too high for someone not to query in my mind if the legislation changes.2 years seems a long time to back date - this could cripple a small business - I had thought 12 weeks was the 'norm'.Your views would be great. Thanks again...I also realise it's very late so I do appreciate your input.
No there isn't n obligation to make these contractual but they could become an implied contractual term anyway, through custom and practice. That is an entirely separate area of law though. Two years is the current limit, but there has t have been a series of deductions (i.e. unbroken series of non-payment going back all that time - if they had paid correctly one that would break the chain and only deductions going forward will be included).
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 49843
Experience: Qualified Solicitor - Please start your question with 'For Ben Jones'
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Customer: replied 1 year ago.
Thanks Ben
You are most welcome