Special Report: Companies warned to ‘act now’ over holiday pay law

New legislation on holiday pay is a ‘minefield’, reports Juliet Dennis

Travel firms could be inundated with backdated holiday pay claims by a “sizeable chunk” of employees if they do not act now to meet new employment law.

In a further reminder about rules which came into force this year, experts on a C&M Travel Recruitment webinar encouraged bosses to be “open and honest” with staff to avoid being “on the back foot”.

Since January 1, staff have been entitled to ‘normal pay’ rather than ‘basic pay’ for at least four weeks of their total annual leave.

MoreTravel firms urged to review holiday pay under new employment law

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Normal pay includes commission for sales or regular overtime payments, and must now be factored into employees’ holiday pay. It is worked out by averaging an employee’s earnings over the previous 52 weeks.

Businesses were told “don’t delay” telling staff what action they were taking to ensure holiday pay was correct.

Travlaw head of employment Ami Naru said: “Employers really need to address this before employees start knocking at their doors. Every month where you [the employer] are not paying the right pay, your pot of potential liability is increasing.”

She raised concerns there could be a “sizeable chunk” eligible to claim, adding: “How can you argue you are a great place to work if you are not doing this?”

Under the Employment Rights Act 1996, employees have three months after a period of holiday when they have not been paid the correct amount – described as an “unlawful deduction” in legal terms – to make a claim. Claims can be backdated for two years provided each holiday is only up to three months apart.

HR professional Claire Steiner said: “[Employers] have to be open and transparent. Tell employees, ‘We are reviewing our policies and we know what is happening’, the sooner the better.” She added: “My worry is if companies are not doing this, a lot of people will find out what their rights are and think they are owed X amount in backpayments.”

While January was unlikely to be a month when many frontline travel staff took holiday, other employees may have already taken time off this year, she said.

C&M Travel Recruitment managing director Barbara Kolosinska admitted the new rules were “a minefield” and said they could affect many staff in the sector. “Most of the positions we recruit for are paid monthly bonuses,” she said.

Flexible working laws to change

Changes to employment regulations will make it easier for staff to put in flexible working requests from April, travel firms have been told.

From April 6, the right to request flexible working will become an employee right from ‘day one’.

Currently, staff must have at least 26 weeks’ service to make a request. Employers will have less time to respond – two months instead of three – and staff will able to submit two instead of one request a year.

Travlaw’s Ami Naru told the webinar: “The new regulations will be heavily weighted towards employees. You need to look at it seriously because flexible working is not going to go away.”

Flexible working covers a range of working arrangements, from compressed hours and term-time working to starting earlier or finishing later.

Naru said a company’s policy on flexible working could influence whether job applicants joined a business.

MoreTravel firms urged to review holiday pay under new employment law

Comment: Are you getting holiday pay right?

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