Employment Law - Assignment Example

Employment Law The paper aims to understand the meaning and the concept behind the current status of rolled up holiday pay. This is done by resolving a case study which included investigation of the problems and issues faced by Food Ltd. The issues are seen and resolved in lieu with the Working Time Regulations 1998. The paper is divided into two sub sections : the first section gives a clear picture about the basic concepts related to holidays and leaves taken by employees in an organization. It identifies and defines the various clauses related to holiday pay as in - calculating holiday-pay, rolled up holiday pay and so on. The second half of the paper relates to the potential problem areas faced by Food Ltd, as in contractual period, opt-out agreement, shift timings, working hours, break timings, annual leaves and sick leaves and it advises the firm on how to handle these issue by providing a suitable solution in accordance with the employment law clauses and cases. 1.1: Holiday Pay: Holiday pay does not exist as a matter of law, as one arbitrator said; or as another held, "There is no inherent right to holiday pay, and none exists except as set forth in the labor agreement". Holiday pay refers to time paid for company-wide holidays such as New Year's Day, Christmas Day etc. Not all organizations that recognize holidays close on those days, or provide employees those days off, or pay employees for the holidays. Some organizations, particularly those operate seven days a week, often only compensate employees for holidays that fall on their scheduled straight time work days. Some do not provide time-off for holidays and instead pay employees, in addition to their regular pay, for holidays. Some organizations pay employees their regular base pays but not any additions, such as shift differentials. 1.1.1: Holiday pay is strictly a matter of contract. Compensation for idle time on holidays, where the payments are in amounts approximately equivalent to the employee's normal earnings for a similar period of time, is excludable from the employees' regular rate of pay for purposes of overtime compensation. When a contract specifies that an employee will receive idle time compensation for the holiday whether or not he works, the sum allocable to holiday pay is excluded from the computational of regular rate and may not be credited against overtime compensation due. The compensation paid for the hours worked on the holiday, however, is included in the computation of the regular rate in the same manner as other compensation for hours worked. 1.1.2 : Idle time compensation : In a contract providing that an employee will receive idle-time compensation for the holiday only if the employee does not work, one should be careful to include a provision to the effect that the employee forgoes or waives his/her right to idle-time compensation if the employee works on the holiday. The waiver will preclude any doubt as to what was intended. 1.1.3: Holiday pay and Law: There is no federal law governing holiday pay. However, almost universally, employers provide time off and compensation for at least a few of the major holidays. It is a common practice, however, for employers to award holiday pay only to full-time employees and require employees to work the day before and the day after the holiday to receive holiday pay. Changing workforce demographics have influenced the way some companies offer holiday pay and decide which days to close. The six most common paid holidays are New Years Day, Memorial day, Independence Day, Labor Day, Thanksgiving and Christmas. However, a company's industry and the market it serves are among the factors determining when a company will close. Banks, for example, are required to close on certain federal holidays. Manufacturers usually try to avoid closing a plant or disrupting a specific shift on holidays, and restaurants and department stores stay open on weekends and major holidays to do as much business as they can get. 1.1.4: Although holiday pay is recognized as an earned benefit, pay for holidays not worked is usually conditioned upon an employee's compliance with certain, contractually stated work requirements. Most collective bargaining agreements, for example, require both a stipulated minimum period of service, and work on designated days surrounding the holiday, before an employee is entitled to holiday pay. 1.1.5 : Holiday pay and sickness of employees : In cases where employees claim that an illness prevented them from meeting the holiday work requirement, eligibility for holiday pay may depend on whether the employees are able to provide a valid medical excuse for their absences. If a contract grants holiday pay without restriction, chances are that a laid-off employee is entitled to it - particularly if the layoff is brief. In deciding whether to award holiday-pay to laid off employees, an arbitrator may examine the specific language of the contract, the timing and length of the layoff period or the employers reason for instituting the layoffs. 1.1.6: Holiday pay and part time - employees: Some organizations pay part-time employees for holidays that fall within their scheduled work time. That pay is usually equal to what the employee would have been paid had the employee worked that day as scheduled. For example, if a part-time employee is normally scheduled to work for four hours every Tuesday and a holiday falls on Tuesday, the employee receives four hours of pay. However if the part-time employee is not normally scheduled to work on Friday, and a holiday falls on Friday, the part-time employee receives no holiday - pay. Thus, holiday pay is working hours of regular straight- time pay, regardless of the employees regularly scheduled number of hours in a work day. If a non exempt employee works on a holiday, he will be paid, in addition to holiday pay, pay for hours worked at the applicable rate. 1.1.7 : Holiday pay calculation : One of the important tasks is the determination of holiday pay. Disputes may easily arise over the remuneration that workers should receive for the duration of the holiday, especially in work where earnings fluctuate or where the basic wage forms only part of the remuneration. 1.1.8: Convention No.132 (Article 7, paragraph 1) lays down the principle that a worker should receive "at least his normal or average remuneration (including the cash equivalent of any part of that remuneration which is paid in kind and which is not a permanent benefit continuing whether or not the person concerned is on holiday), calculated in a manner to be determined by a competent authority or through the appropriate machinery in each country". While this principle is clear; its practical application may be a source of uncertainty. To minimize grounds for dispute, national laws, regulations, collective agreements or other texts should specify how remuneration is to be determined for the purposes of holiday pay. Overtime, for instance, may be treated differently, depending on whether it is occasional and represents an insignificant part of earnings or whether it is frequent and represents a regular and substantial element in the pay packet. A cost of living allowance which forms a major part of total remuneration might be counted towards holiday pay; various minor allowances might not. Several countries take an average of actual earnings over a specified period preceding the holiday -13 weeks, six months, even a year. But in this case account might have to be taken of major fluctuations in earnings or interruptions of work, perhaps by excluding from the calculation of average any time not worked or any periods of short-time working and the like. 1.2 : Rolled-Up Holiday pay : 'Rolled - up' holiday pay refers to the practice of an employer agreeing with workers that their pay for annual leave is included in their hourly remuneration and paid as part of remuneration for working time but not paid in respect of a specific period of leave actually taken. It is a practice used by many employers in the UK, particularly in the construction, manufacturing and education sectors. 1 1.2.1: Benefits of rolled up holiday pay: The advent of this proved to be more beneficial to employers than to employees. There are many issues which arises when the employers pay workers on an hourly basis and agree to add to their hourly rate of pay a specified percentage of holiday pay. This implies that an employee would receive holiday pay on an ongoing basis throughout the year i.e. a specific amount based on percentage calculated in every month's salary; but not as and when he/she takes a leave - indeed the worker may not formally take any specific period of leave but is treated on being on holiday when he or she is not working. Thus, payment of holiday pay through this rolled up hourly pay system is administratively convenient for employers as they do not have to specifically calculate holiday pay every time a worker takes leave, which is especially beneficial for the employer in circumstances where hours of work (and therefore amounts of pay) fluctuate throughout the year. However the system has been criticized as discouraging workers from taking holiday, particularly as the more work the individual carries out the more pay they earn during the year.2 However, in many countries the practice of making payments for statutory holiday entitlement through a system of 'rolled - up holiday pay' has been ruled unlawful. Case Study : An in-depth analysis of the entire situation in the firm, Food Ltd, gives an understanding of the potential problems being faced by the firm. These problems include, working hours, night shifts, contractual period, annual leaves, sick leaves and so on. The issues and the solution rendered for each of them are stated below : 1. Working Hours: As per the International Law, the standard working hours under the Law are a maximum of eight hours per shift for 48 hours per week, with an average of eight hours per shift for 40 hours per week during a 13-week period. Deviation by collective agreement is possible, but in this event, the maximum is ten hours per shift, and average hours worked must not exceed fifty hours per week during each four week period and 45 hours per week during each 13 - week period. There are steps which the store can take to ensure that there is ready availability of notices and opt out opportunity. However, as per the rules, the reference period for calculating the 48 hour week is normally 17 weeks, but it can be extended to 26 weeks if this is permitted under a collective or workforce agreement. There is no 'opt-out' for individuals wishing to work longer than an average 48 hour week , but break periods and 'periods of availability' will not count as working time. When employees work irregular hours each week, it becomes very difficult to figure the regular rate of pay. Where the fluctuations are great - some weeks at 40 hours or more and others under 40 hours - the owner of the store would be benefited if he could enter into a Belo plan with those employees. Such a plan would allow the owner of the food store ltd to fix an artificial ' regular rate' - one that takes into account the wide swing of hours and pays the employee a weekly salary based on a set number of hours per week. The guaranteed number of hours per week cannot exceed 60. Anything over 60 hours would be paid the usual time and one half over time as per the employment law. 2. Night Shifts : The period during which the night work rules apply is between midnight and 6.00 am. There is a maximum of eight hours per shift during these hours. A deviation by collective agreement is possible, to a maximum of nine hours per shift and an average of 40 hours per week during each 13- week period. The standard number of night shifts allowed is 16 before 2.00 am and 10 after 2.00 am during each four-week period, and 25 after 2.00 am, during each 13 week period. A collective agreement between the employer of Food Ltd and student employees must be made in such a form that it may provide for a deviation from this standard up to a maximum of 52 night shifts before 2.00 am and 28 night shifts after 2.00 am during each 13 weeks period. This would prove to be very beneficial. 3. Overtime : The standard overtime allowable is 11 hours per shift and 54 hours per week, with an average of 45 hours per week during each 13-week period. A deviation by collective agreement is possible to a maximum 12 hours per shift and 60 hours per week, with an average of 48 hours per week during a 13-week period. In this case, overtime must be guaranteed to the employees by Food Ltd. If an employee works less than the artificially set hours used to determine pay, he or she must still receive the full amount. This will boost up the employee morale and sets forth good results. 4. Holidays: As per the International labor and Employment laws an employer must allow 10 working days off with pay to employees who have worked an entire year without an absence, and eight working days off with pay to employees who worked 90 percent or more of the working days during the year. The leave time is increased by one day per year for each consecutive year of employment exceeding one year. As is the case with monthly leave, employers are permitted to substitute extra days off for the required annual leave, subject to agreement with the employee representative. This would again prove to be an added advantage in boosting employee's moral. For employees who are entitled to more than 20 days annual leave per year, an employer may "but back" any unused leave in excess of 20 accrued days of annual leaves at the rate of 100 percent of the standard wage. Also, if the total number of accumulated annual leave days exceeds 20, the employer may require the employee to work on those days in excess of 20, and pay the standard for each leave day worked. 5. Annual Leaves: Annual leave is usually accrued over "leave years" from the date of employment or the date of commencement of the organizations leave year. If an employee joins an organization during the course of the leave year, their annual leave entitlement is calculated pro rata to the full leave year. The annual leave accruing during a particular year should be used within one year or the employee will forfeit the unused portion. This rule does not apply if the employee is prevented from using the annual leave due to causes attributable to the employer. An employer must grant the annual leave when requested by an employee. However, the timing of the leave may be adjusted by the employer if the originally requested time off would create significant difficulties in carrying out the employers' business. Compensation for unused lease is the same as for monthly leave. Holiday pay entitlement : Entitlement to holidays and holiday pay for most workers is determined by their contract of employment subject to the minimum conditions of the Working Time Regulations. Most employees had the statutory right to receive from their employers a written statement of employment details; although not a contract in itself this statement provides evidence of many of the terms of the contract. These must include provisions relating to holidays, including public holidays and holiday pay. Also, restrictions on the taking of annual leave may be stated in the contract of employment, implied from custom and practice or incorporated into individual contracts from a collective agreement between the employer and trade unions. Recommendation : It is highly advisable for Food Ltd, to organize its various activities and keep everything documented. A separate database detailing all the aspects related to employees would prove to be highly effective and helpful. Besides, few basic measures could be taken to keep order of everything. The Staff Organiser or the owner of the store should both hold and generate information about store operations. The 'store mode' is a template that details the departments and works teams through out a store or chain of stores. It also includes information about the opening hours of the store, and significantly, a structure for when different activities such as deliveries or shelf-stacking should take place. Data is also entered about staff including the hours and days of they work. Supervisors provide details about the skills of each member of staff and rank their proficiency at each skill using categories included in the system. From this the Staff Organiser could generate a "skills matrix' and a profile of staff for each department or all stores and can determine areas of weakness where training or improvement is required. Thus, on a foremost basis it is advisable that the owner of Food Ltd maintains such a template which can store and generate all the information about its workers, so that it would be much easier for him to work in an efficient manner. There are various indicators of and targets for 'effective' use of staff built into the workings of the Staff Organizer. The most critical are measures of 'scheduling successes - a percentage that indicates how much of priority activity is unstaffed. These 'priority shortages' can then be used in another stores as signs of departmental or store efficiency. The system uses local and central data to produce detailed staff plans for each department in the store. Each shop floor member of the staff is listed on the plans, alongside a grid of codes and symbol that map his or her day in fifteen minute segments. These include all their activities. The plans also indicate where shortages appear and where staff can do 'concurrent tasks' (undertaking more than one task at the same time). CONCLUSION : Looking at the various aspects of the working conditions in the company, I would strongly recommend that Food Ltd should remove the system of rolled up holiday pay, as it has been held unlawful by the European Union court of justice and also it may result in the employee not actually taking their holiday which is not healthy for an organization's long term run. In order to take this step the employer of Food Ltd will need to renegotiate all the of employees employment contract regardless of how long the employee has been with the company. This will enable the employees to take statutory holiday pay to be made at the time the holiday is taken, however the employer will need to check which employees are entitled to a leave and how many days the employee is entitled to, and as for the owner taking the view that the temporary staff are not entitled to holiday pay because they haven't worked there long enough, under the Working Time Regulation Act 1998 states that an employee is entitled to holiday from the first day they start work. REFERENCES : Lockton Deborah (2005). Employment Law. Kidner Richard (2005), Employment Law 14th edition. Soulsby and Marsh (2003), Outline of English Law 5th edition. Wolkinson Benjamin (1996). Employment Law: A Guide to the Workplace Rights of Employers and Employees. Blackwell Publishing. www.pinsentmasons.com/media/561764804.pdf Read More