Holiday Commission Payments – The Verdict

Finally we have the decision about the calculation of commission payments.

This well publicised case was brought by Mr Lock, an employee of British Gas. He was paid a basic salary and commission based on the sales he made which represented, on average, over 60% of his take home pay.

British Gas paid holiday pay to Mr Lock based on his basic salary only, plus commission on sales he had earned prior to the holiday period. This resulted, in the weeks and months after the period of leave, in times when Mr Lock only received basic salary and not commission. This was because Mr Lock was not at work during the period of leave, did not make sales and did not generate any commission.

Mr Lock brought a claim against British Gas contending that his holiday pay should be based on basic salary and average commission.

The employment tribunal asked the European Court of Justice (ECJ) whether employers should include commission when calculating holiday pay and both decided that Mr Lock should be paid holiday pay including overtime. Since the ECJ we have been awaiting for the employment tribunal to see how to give effect to the ECJ decision.

At the hearing Leicester employment tribunal made it clear that the case was not about whether the commission received by Mr Lock should be included because the ECJ had already decided that it should. The case was about whether the Working Time Regulations could be interpreted to give effect to the ECJ decision.

The employment tribunal concluded that it could by adding wording to the Working Time Regulations which requires employers with workers who have normal working hours but who receive commission or similar payments to calculate holiday pay as if their pay varied with the amount of work done. The effect is to require employers to calculate holiday pay based on an average of the previous 12 weeks’ pay.

The Next Steps

Not all commission payments will qualify and have to be taken into account. You should reconsider how you calculate holiday pay if you operate a similar commission scheme, as you may face a claim for back pay. Legislation was introduced to limit the impact of such claims by restricting back pay for two years for cases on or after 1 July 2015.

This decision relates only to the calculation of four week’s holiday and not the entire current statutory minimum of 5.6 weeks or any enhanced holiday. You should also check any contractual provisions. If you need any help calculating holiday pay for your employees, call us on 0118 940 3032 or click here to email us.

Improving Performance Through a Probation Period

Taking on new members of staff for a growing business can be a costly and time consuming process – especially if you get it wrong. Finding the best person for your business is important, and many people think that they can sit back and rest once their new recruit arrives on their first day. But that’s just the start of it!

This blog looks at how to give your new employee the best start with your business.

You worked hard on crafting the best Job Description for your new team member. The adverts went out and the applications came in. You spent time interviewing potential candidates to join your team. Finally you found them – the perfect person to work with you. They even turned up on their start date. What happens next?

If you think you can just sit back and expect your new recruit to get on with their job and perform as you expect them to – with no input from you – you’ll be disappointed.

The first thing to do – even before a new employee joins you – is to decide on the length of their probation period. This could be between three and six months, depending on the type of work being done. The probation period is your chance to start assessing your new recruit; it’s their time to find their feet and get used to their new role. It is a vital tool in measuring the performance of a new employee.

Next you need to plan when you’re going to review their performance, during the probation period. Planning a review halfway through is a good idea – don’t leave it until the end. This allows you to take action if you’re in any doubt about their ability to do the job for which you have employed them. Their performance will only get better if you do something about it. They might not have understood the job that you need them to do, so this is the time to go over what you expect from them. It’s also a good time for them to air any concerns they might have about their future with you.

You should next plan to review the performance of your new recruit before the end of the probation period. This could be after five months, if the probation is six months in length. This gives you time to properly review their performance and plan any action that needs to be taken – such as training or development. This will put you in the best position to be able to confirm whether or not your new recruit will be staying on.

If you decide that they will not remain with you, and your employment contract is correctly worded, the notice period for a new employee is usually less than for someone who successfully completes a probation period. If they have to leave, you can quickly turn your attention to finding a better person to fill their role.

There is no legal requirement for using a probation period at the start of an employment contract. However, it is a very good way of making sure you get the right person for the job, after all the time and effort you put into the recruitment process. Just make sure that your employment contract explains all this and that you discuss the use of the probation period with anyone to whom you offer the job!

What’s the Best Way to Keep Your Staff Happy?

Happy employees make happy clients and customers. Here’s a check list of all the things you should be doing, to keep your staff – and therefore your clients and customers – happy. How many are you doing?

  • Improve their engagement with your company – low cost options include offering flexibility, the opportunity to buy or sell holiday and working from home
  • Cheer everyone up – buy them food at work
  • Give lots of praise – in public, if necessary
  • Recognise their achievements – a lot
  • Be reassuring (but realistic) about job security
  • Be flexible about working hours and opportunities to improve their work life balance
  • Be open, honest and involved with your team
  • Keep them in touch with all the news – good or bad
  • Keep up with employees training and development – it does not need to cost a lot. Don’t abandon development and new opportunities. Job training is perceived as a value
  • Develop your company culture – involve everyone in decisions and provide opportunities for staff who don’t normally work together to get to know each other
  • Offer chances to put forward suggestions – it could save you a fortune and it increases the sense of ownership and belonging
  • Provide regular team meetings to reinforce the company culture and beliefs
  • Think about using a promotion as a low cost way of improving self-esteem and self-worth
  • Treat everyone with respect – it doesn’t cost anything and it improves motivation.

How well did you score? What more could you be doing to keep your staff happy?