The ruling is expected at the Court of Appeal on the Bear vs. Fulton case (plus two other less publicised ones), shedding light specifically on how the courts will interpret the EU-wide Working Time Directive.
If the tribunal sides with the employees in this case, businesses fear they will face huge payouts on back holiday pay that has not at present included overtime. The EU has also previously said that commission and bonus payments should be included in holiday pay.
The unions argue that many workers rely on their overtime and therefore it should be included in holiday pay. Business leaders meanwhile are understandably worried. With an estimated five million people getting overtime, this has the potential to affect a lot of businesses.
Rumours fly of potential backdating which would lead both to an administrative overload on small business and even worse a financial one. Simon Walker of the IoD said it is a “time bomb” that could have a hugely detrimental impact on business and that many could be wiped out.
“We have spoken with business groups and listened to their concerns, as well as intervening in the case to make clear our view,” Walker added. John Allan, of the Federation of Small Businesses, said it is “extremely unfair, businesses could be hit with a bill which no one knew was coming”. The CBI’s Andrew Palmer suggested Scotland could see job losses with bills running into billions, with many companies not surviving and an immense dent in confidence affecting investment.
Read more about the Working Time Directive:
- How the decision that overtime should be included in holiday pay affects your business
- Two-thirds of workers working “much longer hours” than before
- UK firms will need to factor in overtime when calculating holiday pay
It is only human nature that individuals who might benefit from this are supporting the cause. How the unions, as ever, absolutely fail to see is how catastrophic this could be for businesses and therefore how many jobs would be lost is absolutely beyond me.
As always, they leave me at a loss when they campaign for something that will benefit some individuals and they can get high mileage press out of it for themselves; but equally as usual, they completely neglect the bigger picture of the resultant job losses. The European Court of Justice too weighs in on the unions side – but then we only have to look at a comparison to how most of Europe has fared during the recession, or indeed compare Britain’s impressive lead of German’s mid-size companies, to establish which rulings tend to favour business growth and stability.
It is a tricky problem for the government. A nervous spokesperson for the Department of Business, Innovation & Skills has said hopefully: ‘The government wants to get the right balance between the needs of employers and employees.” They say they are concerned about the potential impact on employers – And well they might be in election year.
As a ruling either way is likely to be appealed against, a final decision could be years away – and that is undoubtedly the government’s best hope. The last thing they need is a savaging of the business community, a massive loss of confidence in the economy and the torrent of job losses which would undoubtedly follow. It is a nightmare that might be enough to send a die hard Tory off voting for UKIP.
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