The Employment Appeal Tribunal’s (EAT) decision to compel employers to include overtime in employees’ holiday pay has opened a gigantic can of worms for employers.
Firstly, the ramifications of the ruling remain unclear. For example, should voluntary overtime be included in calculations? And exactly how far should employers backdate pay?
Secondly, in light of these uncertainties, how can employers possibly calculate the likely impact of the ruling on their organisation?
And so, thirdly, should employers start to review their pay policy now or wait until the EAT provides further guidance?
The government plans to set up a task force through which to tackle the issue, which, let’s face it, if successful will do no harm to its campaign ahead of the 2015 general election.
In the meantime, employers have two options: act now and risk making overpayments, or wait until the EAT provides further guidance on its ruling.
Option two does not mean employers should do nothing.
For example, organisations could, at the very least, create a communications campaign to educate staff about what the ruling is and the possible impact for them, because many will inevitably have read or heard about the issue in the news.
Such action can help to reinforce employers’ image as caring organisations that are working hard to protect and uphold staff rights, boosting employee engagement in the process.
There is no fear in organisations communicating an issue about which they do not have all the answers. After all, consider the alternative of doing nothing: employees’ questions and fears will escalate, opening a further can of worms for hard-working HR and benefits and compensation professionals.
There is also support at hand from, for example, trade unions and, of course, lawyers, who are no doubt currently rubbing their hands with glee in anticipation of employers’ queries.