Opinion

Charlie Mullins: Holiday pay ruling shows bureaucrats know nothing about business

4 min read

10 November 2014

The recent tribunal ruling that overtime can be included in holiday pay proves how quickly employers can become the villain of the piece despite their heroics during the recession.

When the UK began to pull itself out of the economic doldrums it was the business community that was hailed as the country’s saviour. However, it appears we’re now ready to be knocked off our pedestal by bureaucrats ready to portray us as the big bad wolf.

It’s not as if we’re gang masters operating some kind of 21st century slave trade. Our employees are valued and, as I wrote last week about the living wage, we understand the benefits of having a happy, motivated workforce.

However, any worker who thinks they have won a victory after the ground-breaking overtime in holiday pay employment appeal tribunal couldn’t be further from the truth.

If employers are forced to take into account overtime pay when calculating holiday pay, then everyone will end up a loser. It’s that simple. And if those union bozos think they have won a great victory against ‘the man’, they are more stupid that I thought.

Employers like me are happy to pay overtime for work done. My overtime bill is huge and I don’t care, as long as I get an hour’s work for every hour’s money I pay out. It’s a simple contract, and one that works for everyone. It’s flexible, but anyone who doesn’t want to work long hours isn’t forced to do them.

But, if I’m going to have to pay workers for overtime they’re not actually doing, while they are on holiday, then I’m not going to be happy, and I’m going to have to change my overtime policy.

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Overtime is something extra, agreed between employer and employee, which workers are not obliged to do and employers are not obligated to give. It’s an arrangement that suits everyone; otherwise it would be part of a normal contract, which it isn’t.

I have heard it argued that people expect and rely on the extra money, and when they are on holiday it comes as a shock not to get the overtime cash. But in more than 35 years in business I have never had anyone complain about this. People are not that stupid.

The whole thing makes no sense. If, as the unions think, there’s going to be a cash win for workers all that’s going to happen is costs are going to increase, without any increase in productivity.

The upshot of this is going to be rising prices, which comes out of the newly-enlarged holiday pay packet. But more likely overtime will be cut, with the gap being covered by part-timers, or perhaps the ultimate lowering of wages to take into account the increased costs of holiday pay.

Whatever way you look at it the only winners probably are going to be the employment lawyers, who have been fighting it out in the appeals tribunal, and will continue to fight this one out for some time to come in other courts.

This country has a habit of knocking the successful, but to cast every employer in the country as the enemy and putting costs up for firms and their customers alike only goes to prove that the bureaucrats behind this decision know nothing about business.

Charlie Mullins is founder and CEO of Pimlico Plumbers.

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