John Lewis corrects holiday pay
Labour & European Law Review Weekly Issue 334 28 August 2013
Following a review of its holiday pay policies in light of developing case law on working time, the John Lewis partnership is paying its staff an extra £40 million for holidays taken since 2006.
The review concluded that their calculations about what their employees should receive while on leave have been wrong by excluding additions such as premiums. Around 69,000 John Lewis employees will receive an additional one-off payment this month reflecting the amounts due to them back dated to 2006.
The major judgment in this area was a Thompsons case - BA v Williams - where the Supreme Court ruled in 2012 that workers should receive holiday pay not on basic pay but on their normal remuneration including supplements.
Most employers have failed to take heed of Williams and continued to pay basic pay only for periods of holiday, an approach that was criticised in another Thompsons case recently before the Birmingham Employment Tribunal - Neal v Freightliner. In the light of European case law and Williams the ET re-emphasised that normal remuneration should be paid.
Williams and now Neal mean that employers will inevitably lose other cases going through employment tribunals in which workers are challenging the basis on which their holiday pay has been calculated.
Victoria Phillips of Thompsons Solicitors said: “Williams made the law clear and Neal has now removed any doubt. All employers should follow John Lewis’ example and base what they pay their workers for their holidays not on basic pay but on their normal remuneration including supplements.”