Holiday pay law
The CBI are warning that employers are facing the risk of significant additional costs, potentially 'billions of pounds', from employment tribunals challenging the normal calculation of holiday pay under the Working Time Regulations (WTR).
In the UK holiday pay is currently calculated on the basis of a 'week's pay' which is based on basic salary and excludes payments such as working allowances, expenses, overtime, commission and bonus payments as these payments relate to specific work done by an employee whilst performing their duties of employment.
A recent European Court of Justice (ECJ) judgment redefined holiday pay to include an allowance for commission, even though commission is paid on sales made and the employee would not have delivered those sales whilst on holiday.
If liabilities on holiday pay are backdated then employers may face huge liabilities for holiday pay arrears.
Katja Hall, CBI Deputy Director-General, said:
'Backdated claims on holiday pay could lead to bills of millions of pounds for each business, and ultimately threaten their very existence.'
'Businesses that have done the right thing and fully complied with UK law suddenly face the threat of substantial additional costs. And the companies most at risk are in vital sectors for our economy, such as manufacturing, construction and civil engineering.'
'Moving the legal goalposts in this way is unacceptable. Although most businesses believe we are better off in a reformed EU, there is a real danger of expansive decisions being made by the European Court of Justice on the UK labour market. As part of an EU reform programme, this has to be addressed and it's time to put a stop to back-door EU employment law being made.'
'We need the UK Government to take a strong stand and do all it can to remove this threat. Otherwise we face the very real prospect of successful firms in this country going out of business, with the jobs they provide going too.'
Cases on commission and overtime are currently in progress and we will keep you informed of developments. Meanwhile the CBI is calling for the Government to use its powers under British law to limit the retrospective liability UK employers face.
Internet link: CBI press release
Our other services...
We can help with the preparation of accounts for all types of business. Whether you are a Sole Trader, Partnership, Limited Company, Limited Liability Partnership or a Charity, AGP has the expertise to deal with you. We help you fulfil all your obligations with HMRC, Companies House and any other regulatory body that you are required to report to.
An audit provides a high level of independent assurance of the financial position and results of an organisation. This gives shareholders confidence that the reported performance of the business is accurate as well as providing external users with certainty that the accounts show a true and fair view. An audit lends credence to the company accounts in a number of ways.
It is important to ensure your tax planning reflects any changes to your circumstances which is why we work very closely with all our personal clients. AGP are trusted to manage tax efficiently. Sometimes just a simple review of your personal tax circumstances can reveal significant tax saving opportunities which can be realised quickly and at minimal cost..
AGP can become your own part-time Payroll Manager. An expert who knows the complexity of the relevant legislation inside out and for a fraction of the cost of an internal manager. Why not outsource this obligation and spend the time saved doing what you do best, running your business?
Corporation tax can be a huge outgoing for your company if it is not managed correctly and planned appropriately. You can trust AGP to employ a holistic approach to your tax planning whether you are a medium sized SME, an international organisation or a small owner-operator.
Management accounts allow business owners to exert a far greater degree of control over their business, recognising and addressing problems and identifying opportunities soon after they arise.
When running a business, priorities are often focused on the operational side of your business. Bookkeeping & administration can often be put off until it becomes quite a major task. By taking advantage of our bookkeeping service, we can take this problem away so you can get on with running your business while we manage your accounting books.
We take away the hassle. Whether starting a new business or restructuring an existing one, our extensive knowledge of company formation means we can advise you on the merits and possible pitfalls of incorporation.
We have a wealth of experience in the contractor market and as a result there are not many firms of Chartered Accountants that can claim they know the contractor industry as well as AGP. This leads to a number of benefits.