Holiday allowance/law
Discussion
I have a quick question regarding holiday pay entitlement.
I am an employee, I work in private healthcare. My pay calculation is fairly complex so bare with me.
I have a very low base salary (something like £1200/month) but then I earn a % of how much money I bring into the clinic, once I bring in over £3500 (I think). It is fairly easy to hit that amount, usually under 1.5 weeks. After that, I start getting a %. I can't remember exactly but it's something like 35% from £3500-6000, 40% £6000-8000, 45% £8000-10000 and 50% above £10k. I also get bonuses, over £7k income I get £300. Over £10k I get £700 (on top of the £300), over £12k I get £1k (on top of the £300 + £700).
Got all of that? Good
Now, let's assume for arguments sake in a month I typically earn £5500. If I have a week holiday, I will almost certainly lose the £10k £700 bonus (the £12k one is hard to hit, a few times per year), plus obviously I miss out on the commission I would earn during the week I'm off. So if I have a week's holiday, my pay may drop from £5500 to about £3500.
My boss says I am getting holiday pay because I'm getting my base salary of £1200 or so, but in my view if I get paid for holiday, having a week off wouldn't effect my earnings.
Is this in line with employment law? Just thought I'd double check because someone mentioned it might not be. I have been working there for over 10 years and, generally speaking, the boss is a nice guy who I get on well with.
Many thanks.
I am an employee, I work in private healthcare. My pay calculation is fairly complex so bare with me.
I have a very low base salary (something like £1200/month) but then I earn a % of how much money I bring into the clinic, once I bring in over £3500 (I think). It is fairly easy to hit that amount, usually under 1.5 weeks. After that, I start getting a %. I can't remember exactly but it's something like 35% from £3500-6000, 40% £6000-8000, 45% £8000-10000 and 50% above £10k. I also get bonuses, over £7k income I get £300. Over £10k I get £700 (on top of the £300), over £12k I get £1k (on top of the £300 + £700).
Got all of that? Good
Now, let's assume for arguments sake in a month I typically earn £5500. If I have a week holiday, I will almost certainly lose the £10k £700 bonus (the £12k one is hard to hit, a few times per year), plus obviously I miss out on the commission I would earn during the week I'm off. So if I have a week's holiday, my pay may drop from £5500 to about £3500.
My boss says I am getting holiday pay because I'm getting my base salary of £1200 or so, but in my view if I get paid for holiday, having a week off wouldn't effect my earnings.
Is this in line with employment law? Just thought I'd double check because someone mentioned it might not be. I have been working there for over 10 years and, generally speaking, the boss is a nice guy who I get on well with.
Many thanks.
Jamescrs said:
There is case law in place for this type of position, i'll post a link below but I would advise you seek professional advice from a Solicitor and not take it at face value, the point being there is a precedent which may assist
https://sasdaniels.co.uk/blog/commission-payments-...
Interesting, thanks.https://sasdaniels.co.uk/blog/commission-payments-...
Jasandjules said:
It is not a surprise that the answer is not quite clear cut. The starting point is what does your contract say? Then do you have fixed "normal working hours"?
Yes, I have fixed hours each week over a 2 week rota. However, this has since changed. After covid we changed a few things and my working week is now approx 2.5 hours longer than before, give or take.I haven't seen the contract in many years but I believe it said we got holiday pay based upon our base salary, but I couldn't swear to that. But even if it says that, but the law says it's not in line with employment law, does that matter, I wonder?
Wills2 said:
If one of my team goes on holiday they get paid on the business their clients bring in whilst they are away anything else would be unfair, but if they (the sales) don't come in they won't get the commission as there is nothing to base the payment on.
I think this is the situation I'm in, but I'm not sure it's strictly "right", as I gather employment law says that holiday pay should account for your typical earnings. Mortarboard said:
I believe it's averaged these days:
https://www.citizensadvice.org.uk/work/rights-at-w...
There may be exceptions based on sector, so you'd have to check specifics.
M.
Thanks very much. I have spoken to a friend who is an employer in the same position as me, they said it's a legal obligation to pay for average bonuses/commission during holidays.....so I just need to work out whether my boss could turn round and say "fine, but I'm going to reduce your bonuses".....!?https://www.citizensadvice.org.uk/work/rights-at-w...
There may be exceptions based on sector, so you'd have to check specifics.
M.
I have spoken to ACAS who were incredibly helpful. They basically said "yes, you should get the same amount if you take a week off as if you were working" under the work time regulations act. This came in in 2014 I gather. Basically your holiday should be worked out at average earnings over the past 52 weeks.
They also said that holiday can be backdated for 2 years, possibly longer if a judge deems it suitable (I've been there for 10 years....). I am not looking for all of that, it'd cripple my employer, but it'd be nice to get paid for the holiday I've just had and moving forwards.
They said because my commission/bonus entitlement is written in contract they cannot change it unless I legally agree or if it's written they can change it (it isn't).
So I will tread carefully, ask my boss to look into it and ask if I am correct (which I know I am) then just be paid for the holiday I've just had and moving forwards. If it does go a little south I can then show him the ACAS and citizen's advice links. If that goes south they said you could take them to a tribunal and get a lot of backdated pay, but I can't see it coming to that.
Watch this space!
They also said that holiday can be backdated for 2 years, possibly longer if a judge deems it suitable (I've been there for 10 years....). I am not looking for all of that, it'd cripple my employer, but it'd be nice to get paid for the holiday I've just had and moving forwards.
They said because my commission/bonus entitlement is written in contract they cannot change it unless I legally agree or if it's written they can change it (it isn't).
So I will tread carefully, ask my boss to look into it and ask if I am correct (which I know I am) then just be paid for the holiday I've just had and moving forwards. If it does go a little south I can then show him the ACAS and citizen's advice links. If that goes south they said you could take them to a tribunal and get a lot of backdated pay, but I can't see it coming to that.
Watch this space!
Mortarboard said:
What have they been paying you for holidays so far?
Is your current role/pay structure been relatively recent?
M.
Current pay structure has been the same since when I started (just over 10 years). I have never been paid for holiday, I lose out significantly. For example I had 1 week off in May. In April and June I grossed approx £5500 each month. In May I grossed basically £3kIs your current role/pay structure been relatively recent?
M.
Not only because of losing 1 week's commission but also missing the bonus I'd usually hit.
Mortarboard said:
It's worth their while (not just yours) finding out what it should be/should have been.
You may need to be prepared in case it happens that your missed bonus/es aren't included - they could be entirely discretionary
But would be good to have clarification on anyway.
M.
ACAS and citizen's advice have said if the bonuses are written in the contract they are not discretionary and need to be paid accordingly.You may need to be prepared in case it happens that your missed bonus/es aren't included - they could be entirely discretionary
But would be good to have clarification on anyway.
M.
Personally, I think the easiest way of working it out is as follows (for reference, I do 7 shifts per week).
"You have worked 23 shifts this month and have taken 7 shifts off. In those 23 shifts you have brought in £8500. Therefore, in 30 shifts you would have brought in (30/23 x £8500) £11086 and we will pay you as if that's how much you earned".
Mortarboard said:
Yes and no (without having seen your actual contract wording).
-Bonus could be in the contract, but could still be discretionary. As in, the language in the contract might say "discretionary bonus of X on selling Y of product". A bit mean if it's a sales based compensation package.
-They could also say that you weren't there, didn't get the sales required, so neener neener.
Also beware that the "custom & practice" element may apply also, in that as it went on for so long, that the current situation has become the "de facto" contract. But that's a very specific legal construct, so you'd have to take legal advice on that.
If I was in your shoes, I'd be as agreeable as possible (it's gone on for so long anyway), and nudge firmly along the lines of "it seems x,y,z should have been included, what shall we do?", and avoid getting arsey. Legal routes are always an option in the future. Catch more flies with honey than vinegar
On the flipside, if you reported to me with the approach of "legally, you owe me x,y,z" and waving a printout of legislation/ACAS emails, I'd tell you I referred it the the legal team & HR. End of discussion, I'll let you know if/when I hear back.
M.
The bonuses are written in the contract saying "if you raise £xxxx you will get paid £xxx bonus". Re your second point, the law states that you should be remunerated as if you were working. So if, on average, you earn £xyz amount per month, by having a week off you should still get roughly £xyz, irrespective of whether you're working on a commission/bonus scheme.-Bonus could be in the contract, but could still be discretionary. As in, the language in the contract might say "discretionary bonus of X on selling Y of product". A bit mean if it's a sales based compensation package.
-They could also say that you weren't there, didn't get the sales required, so neener neener.
Also beware that the "custom & practice" element may apply also, in that as it went on for so long, that the current situation has become the "de facto" contract. But that's a very specific legal construct, so you'd have to take legal advice on that.
If I was in your shoes, I'd be as agreeable as possible (it's gone on for so long anyway), and nudge firmly along the lines of "it seems x,y,z should have been included, what shall we do?", and avoid getting arsey. Legal routes are always an option in the future. Catch more flies with honey than vinegar
On the flipside, if you reported to me with the approach of "legally, you owe me x,y,z" and waving a printout of legislation/ACAS emails, I'd tell you I referred it the the legal team & HR. End of discussion, I'll let you know if/when I hear back.
M.
I have been very polite so far, I have just said that it has been brought to my attention that I should be getting paid holiday pay to account for loss of earnings irrespective that we work on a commission/bonus basis and I'd appreciate it if he could look into it further for me. That's a summary, but I didn't mention I'd spoken to ACAS or Citizen's Advice etc. He replied saying if he legally has to do it then he will, but he'll contact the accountant to look into it.
I have spoken with ACAS, explained my full payment scheme/scenario and how it works and what is written in the contract, the person I spoke with was very clear - if I take a week off I should get paid as if I were working, INCLUDING any bonuses/commission that I would have otherwise earned, based upon my earnings over the past 12 months when I haven't had annual leave.
It gets complex when working it out, however, because where I have not been paid for my weeks off in the past, the past 12 months I have ultimately earned less than I should have, and therefore my "average" over the past 12 months will be lower than it ought to be. So it is a bit complex.
Edited by TyrannosauRoss Lex on Monday 17th October 20:44
Mortarboard said:
He'd have to have paid it anyway. Cheaper to pay the correct amount, rather than "correct amount, plus interest, plus punitive damages" after you've sailed off into the distance.
If you have pension contribution matching, I'd mention that too, once the balls rolling
(as that will be higher also)
M.
Ooh didn't think about pension! If you have pension contribution matching, I'd mention that too, once the balls rolling
(as that will be higher also)
M.
So the meeting didn't go too well.
He basically said he couldn't afford an effective £5k pay rise for me and my 2 colleagues. It's a limited company so the accounts are available online....the company is doing OK.
He said 3 options:
1 - rewrites my contract, lowers commission so I earn less each month, but then get holiday pay so my annual income will be the same.
2 - we do nothing
3 - he makes me self employed.
I am not sure if he can do any of those without my strict agreement. Why is there an issue then? Well, I am happy with where I work, the atmosphere has generally been good, and I get on well with everyone. If I go for what I'm legally entitled to, I'm sure I'd get it, but my working atmosphere would be s
te, I risk the boss telling the receptionists to book me fewer patients so I earn less. Or I stick with how it is now but always feel hard done by, knowing what I know. Or, I agree to an effective pay cut to get what I'm legally entitled to. He said the numbers/commission/bonuses were drawn up before this law came in......
Rock. Me. Hard place.
He basically said he couldn't afford an effective £5k pay rise for me and my 2 colleagues. It's a limited company so the accounts are available online....the company is doing OK.
He said 3 options:
1 - rewrites my contract, lowers commission so I earn less each month, but then get holiday pay so my annual income will be the same.
2 - we do nothing
3 - he makes me self employed.
I am not sure if he can do any of those without my strict agreement. Why is there an issue then? Well, I am happy with where I work, the atmosphere has generally been good, and I get on well with everyone. If I go for what I'm legally entitled to, I'm sure I'd get it, but my working atmosphere would be s
te, I risk the boss telling the receptionists to book me fewer patients so I earn less. Or I stick with how it is now but always feel hard done by, knowing what I know. Or, I agree to an effective pay cut to get what I'm legally entitled to. He said the numbers/commission/bonuses were drawn up before this law came in......Rock. Me. Hard place.
This had reared its head again. At the end of November my boss said "Oh, I see what you mean about reduced pay" after taking 10 days off my gross income was under 50% of a typical month, and "I'll have a think about that".
I had heard nothing so messaged him again today and he's proposing that I sign a contract where I earn £150/month less and he pays me £1k/week for when I'm off. So ultimately quids up (loss of £1800/year but gain £4k/year). When I messaged him I said I would happily forego any back payments if we moved forwards correctly, and his proposal isn't "correct" because he's wanting me to sign an inferior contract.
I may message back saying "I think your proposal could work, but what about back pay? I would prefer we keep the current contract, receive no back pay but move forwards with your proposed £1k/month"
I had heard nothing so messaged him again today and he's proposing that I sign a contract where I earn £150/month less and he pays me £1k/week for when I'm off. So ultimately quids up (loss of £1800/year but gain £4k/year). When I messaged him I said I would happily forego any back payments if we moved forwards correctly, and his proposal isn't "correct" because he's wanting me to sign an inferior contract.
I may message back saying "I think your proposal could work, but what about back pay? I would prefer we keep the current contract, receive no back pay but move forwards with your proposed £1k/month"
Sorry for a thread resurrection. Looking at ACAS site they say people are entitled to 5.6 weeks of paid holiday per year. They say those that earn by commission and bonuses get 4 week's per year at that rate. It does, however, seem to suggest that they should still get 5.6 weeks per year, so does this mean that you should get 4 week's worth at full pay but 1.6 weeks at base salary, or literally just 4 weeks at full pay?
Thanks
Thanks
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