The Employment Appeal Tribunal’s decision could mean that some employees who work overtime could claim extra holiday pay to reflect this.
Deputy chief executive at the British Hospitality Association (BHA) Martin Couchman OBE told BigHospitality that the impact on the hospitality industry is likely to be ‘relatively small’; however there is no real way to know what it could amount to yet.
“The first point to note is that as far as our industry is concerned, we don’t actually have any idea what the impact is likely to be because a lot of people are on irregular hours,” explained Couchman.
“And if an employee is paid by the hour they’re not likely to be on overtime, which this decision is fundamentally about.
“It’s also impossible to know the effects because what the Employment Appeal Tribunal has said is subject to caveats, and the ruling is going to be appealed against too.”
However some bodies have taken a negative view on the ruling, with the Association of Licensed Multiple Retailers (ALMR) stating it risks ‘penalising employers’ and ‘hindering investment’.
ALMR chief executive Kate Nicholls said: “The licensed hospitality sector is a first class employer, providing opportunities for both temporary and permanent work. Steps such as this, which penalise employers after the fact, are unhelpful, particularly when businesses will have complied with rules and acted in good faith.
“Businesses in the licensed hospitality sector already invest considerable amounts of time and money in their staff. The ALMR’s Benchmarking survey shows payroll costs at an average of 24.2 per cent of turnover, a sizeable increase from 17 per cent in 1999.”
Trade union Unite, whose members include a number of hospitality employees, was pleased with the ruling and said that employers need to ‘get their houses in order’.
Unite’s executive director for legal, membership and affiliated services Howard Beckett said: “Up until now some workers who are required to do overtime have been penalised for taking the time off they are entitled to.
“Employers will now have to include overtime in calculating holiday pay, and those that don’t should be under no illusion that Unite will fight to ensure that our members receive their full entitlement.”
However the BHA believed there was no need for businesses to act yet as many issues are still up in the air.
Couchman added: “It doesn’t do any harm for employers to check on what basis they’ve been paying holiday pay, but nobody should rush out and change everything right away, because we don’t know yet what the final legal position is going to be.”