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From the BBC

Workers have won a ground-breaking case at the Employment Appeal Tribunal to include overtime in holiday pay.

This means all people working overtime could claim for additional holiday pay. Currently, only basic pay counts when calculating holiday pay.

The tribunal also ruled that workers can make backdated claims, but only for a limited period.

However, the ruling could be referred to the Court of Appeal, meaning a final decision may be years away.

"Up until now some workers who are required to do overtime have been penalised for taking the time off they are entitled to," said Howard Beckett of the Unite union.

"This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order."

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  • PRO
    Another reason NOT to employ people. Is it just me or is the small business employer being penalised more and more frequently?
  • PRO

    Further information:

    News Alert - today’s ruling on inclusion of overtime in holiday pay
     
    Employers please take note - today's EAT ruling has widespread implications for all companies paying overtime to their staff!
     

    Workers have today won a ground-breaking case at the Employment Appeal Tribunal to include overtime in holiday pay.

    This means that  while currently only basic pay counts when calculating holiday pay, in future  everyone doing voluntary overtime could claim for additional holiday pay.

    The government estimates that one-sixth of the 30.8 million people in work get paid overtime i.e. around five million workers could be entitled to more holiday pay.

    Although the claimants have won the overtime case both parties can take this decision to the court of appeal. Also it's still not clear if staff would be able to claim pay retrospectively.

    And it's this element of the ruling that is causing Employers particular concern.

    The Coalition and business groups had argued strongly that overtime should not be included in holiday pay calculations. If claims are to be backdated some sources suggest that " businesses stand to lose billions of pounds".

    On the subject of claims being backdated John Cridland, CBI Director General, stated:

    "This is a real blow to UK businesses now facing the prospect of punitive costs potentially running into billions of pounds and not all will survive, which could mean significant job losses.

    This judgment must be challenged. We need the UK government to step up its defence of the current UK law, and use its powers to limit any retrospective liability that firms may face." 

    BBC's John Moylan, speaking on the News Channel believes, however, that the backdated element may be limited.

    And Andrew Stones, the lawyer who led the appeals on behalf of two of the employers in the holiday pay case, says: "Concerns (of the business community) should largely be alleviated following the judgment... (the tribunal) has really limited the scope for different holiday pay periods to be linked together as one ongoing series of deductions for historic claims. This finding will significantly limit the scope for such claims in the future and the flowing potential liability for companies."

    The cases centre on the interpretation of the EU-wide Working Time Directive, and in particular the Working Time Regulations implemented in the UK in 1998. The tribunal ruling suggests that UK companies have been interpreting the EU directive wrongly.

  • PRO

    Just realised I didn't add a link to the BBC article.
    http://www.bbc.com/news/business-29896810

  • PRO

    I'm reading commentary that suggests this ruling relates to employees where overtime is a 'mandatory' part of their contract, ie they committ to working an overtime schedule. It is reckoned it could add a minimum of 3-5% to the wage bill.

    This comes on top on the mandatory pensions enrolment by 2016 which also will add at least 3% + running costs to the wage bill.

    Many business will reel this back in by reducing pay rises (if any) and headcount to offset.

    Seems like the Union may have shot themselves in the foot ?

    Like many I suspect, I will watching with 'interest' as to whether this goes to Appeal.

  • Personally I think the ruling is fair - If Overtime is mandatory - then its reasonable for the employee to expect it to form part of the holiday pay calculations, as their is no way they can opt not to do the extra hours - in effect the word "overtime" is an arbitary line in the sand between normal working hours and "extra" work.....

    If overtime is addhoc and optional / extra to the normal job then no, its not really reasonable to expect it to be included.

    A good judgement, thats fair, in my opinion.

  • Good point Gary - I can think of several people who sleep in half hour blocks during harvest time, if they even thought of going home to sleep they wouldn't have a job.

  • PRO
    If it costs businesses more to employ then the cost will be ultimately passed to the consumer which is potentially bad news for everyone.
  • Except that it shouldnt cost a well run business any more..............
    As its overtime -------------- If you were regularly needing to employ say 2 guys on overtime, you, if you were a good businessman would realise its time to take another member of staff on, as your clearly getting mroe work than you can handle..........

    Thus the overtime hours cost becomes the cost of the new employee..... no additonal expense.

    If you oblige your employee to do overtime, IE they have no choice, then paying them holiday pay is no different to taking on a new employee, rather than making other staff do overtime to cover the extra workload.............

    Thus is will not cost businesses more to employ.........

    This was really just a loophole used by some employers to basically say "were only going to pay holiday pay on 70/80% of your wage, by arbitarially calling the last 20% overtime".

    It is not bad news for anyone apart from weakly managed businesses which make staff work overtime rather than actually spend THE SAME amount of money, employing an addional member of staff.

  • +(another)1 - David Cox as usual reading through the hype to make a great deal of sense and an important additional point from Gary Smith. There are elements of our "advanced civilised society" which are still only half a step away from institutionalised slavery.

    Nick, consumers pay for everything that happens in our society. They are the ones who have money to pay for it. Give a few more people a bit more money and they will become consumers too. It is a circular argument, the answer to which depends upon ideological (similar if not the same as political) commitment rather than reasoning.

    Think about it: if we can't afford to employ our staff why are we not honing our business skills instead of moaning about it? It's in all of our interests to do so. What right do we have as business owners to financially suppress those who financially depend upon us?

    (aside to Gary RK - one very strong reason I won't rejoin the FSB is that I got very tired of answering those who believe owning a business offers some right to a superior position in life regardless of the level of effort applied by themselves and all employees are b******s trying to rip the bosses off - they are at best misguided and factually tedious)

  • PRO

    Not quite sure where that last comment came from !

    Mike Goodman said:

    +(another)1 - David Cox as usual reading through the hype to make a great deal of sense and an important additional point from Gary Smith. There are elements of our "advanced civilised society" which are still only half a step away from institutionalised slavery.

    Nick, consumers pay for everything that happens in our society. They are the ones who have money to pay for it. Give a few more people a bit more money and they will become consumers too. It is a circular argument, the answer to which depends upon ideological (similar if not the same as political) commitment rather than reasoning.

    Think about it: if we can't afford to employ our staff why are we not honing our business skills instead of moaning about it? It's in all of our interests to do so. What right do we have as business owners to financially suppress those who financially depend upon us?

    (aside to Gary RK - one very strong reason I won't rejoin the FSB is that I got very tired of answering those who believe owning a business offers some right to a superior position in life regardless of the level of effort applied by themselves and all employees are b******s trying to rip the bosses off - they are at best misguided and factually tedious)

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