What did we get up to last month?
The draft regulations for gender pay reporting were published in mid-February. Under the regulations, employers who have at least 250 employees on the trigger date of 30 April in each year will be required, within 12 months of the trigger date, to publish the percentage difference in mean and median hourly pay of male and female employees, as well as the percentage difference in the bonus payments made to them, the proportion of male and female employees receiving bonuses and the gender split in each quartile pay bracket. This information will need to be published on the business’ website, on a page accessible by the public, and must remain in place for 3 years.
The Regulations are due to come into force in October 2016 with the first trigger date being 30 April 2017. This means that the deadline for the first report will be 30 April 2018.
We were interested to read this article about the lack of paid parental leave (including maternity leave) in the US. It is hard to imagine what it must be like to have this culture, especially where in the UK paid parental leave continues to become even more flexible, and is potentially going to be extended to grandparents as well as parents within the next couple of years.
Any new cases to be aware of?
The EAT judgment in British Gas Trading v Lock, which dealt with the question of whether the Working Time Regulations 1996 (WTR) can be interpreted to include commission in statutory holiday pay, was issued at the end of February. This judgment follows in a long line of holiday pay cases examining the question of what payments earned by an employee over and above basic salary should be included in their holiday pay.
The background to the British Gas case is this. Mr Lock was a sales consultant who earned a basic salary as well as commission on sales that he achieved. His commission made up around 60% of his total income. The amount of commission he received did not depend on the amount of work Mr Lock did; it depended purely on the success of that work. Mr Lock had normal working hours each week.
Mr Lock took statutory leave between 19 December 2011 and 3 January 2012 – during that time he was paid his basic salary as well as commission which fell due to be paid to him. His pay during his holiday was therefore on a par with his normal income.
It was the months after Mr Lock’s return from holiday which were the issue. As he had not been able to generate sales during his holiday, his income was much reduced in the period following his leave. He brought a claim arguing that this reduction in pay – which was a direct result of having taken statutory holiday – was a breach of the WTR.
The tribunal noted that for someone with normal working hours (as Mr Lock had) whose pay varied, either with reference to the hours worked or the amount of work done, a week’s pay would be calculated using the average remuneration calculated over the previous 12 working weeks. However, case law had established that variable elements of pay only needed to be included where the pay varies with the amount of work done. This did not apply to Mr Lock, whose commission was earned based on the success of his work rather than the amount of work actually done.
On the other hand, the Tribunal also noted that case law from the European Court of Justice (ECJ) had established that holiday pay calculations must reflect and employee’s “normal remuneration”, and in Mr Lock’s case this would include his commission, given that this formed part of his normal pay. In light of this conflict, the Tribunal referred the matter to the ECJ which held that where a worker’s remuneration includes results-based commission (which is what Mr Lock’s commission was), the Working Time Directive (which is the European legislation which the WTR implements in the UK) does not permit member states to have laws in place which allows for calculation of holiday pay to be based on basic pay only.
In light of the ECJ’s decision, the Tribunal determined that it was possible to interpret the WTR in such a way that it would allow for results-based commission to be included in holiday pay, in compliance with EU law. It took the same approach that the Employment Appeals Tribunal had done when assessing whether or not the WTR could be interpreted in such way that would require overtime to be included in holiday pay calculations.
British Gas appealed against this decision. However, the EAT concluded that the Tribunal had taken the correct approach when determining that it can be read into the WTR that results-based commission is to be included in statutory holiday.
As with the overtime cases, this judgment applied only to the 4 weeks of annual leave provided for by the Working Time Directive. The additional 1.6 weeks, which makes up the statutory minimum leave period under the WTR, is a purely domestic entitlement, meaning that the government and employment tribunals have complete say over how the pay for this period can be calculated and do not need to follow European case law.
The judgment also only answers the question of whether the WTR can be interpreted to comply with European case law on the meaning of a week’s pay for holiday pay purposes. It does not answer any practical questions as to how precisely an employer is to calculate the commission allowance in a holiday payment. The practical application of this judgment therefore remains to be seen.
To sign up to receive our monthly employment e-bulletin, please head to our newsletter subscription page.
