CBI sounds warning about European Court holiday pay ruling
A ruling in May from the European Court of Justice (ECJ) on holiday pay could cost SMEs 'billions' in back payments, according to the CBI.
The decision, which was handed down following a tribunal claim, holds that the holiday pay of workers whose salary comprises a regular commission should include a sum that reflects an average of that commission.
Until now, holiday pay has usually been calculated on basic salary, excluding extras such as bonuses, overtime and commission payments.
The manufacturers' organisation EEF estimated that an SME in the manufacturing sector with a £30 million annual turnover could expect to get a potential bill of £2.75 million.
The CBI said the decision was 'the single biggest employment issue for businesses' and called on the Government to 'vigorously defend' existing UK law.
A ruling by the ECJ in an earlier case already laid down the principle that holiday pay should reflect 'the normal remuneration' received by a worker.
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Acas has published the Advice leaflet - Holidays and holiday pay [164kb], which covers everything you need to know about annual leave entitlements, giving notice, taking leave, and calculating holiday pay.
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