Overtime Holiday pay implications on the MICE Industry.Tagged : catering conference costs employers employment holiday hotels mice overtime service uk venues
Overtime Holiday Pay Changes
A ground-breaking case at the Employment Appeal Tribunal has seen a move in which businesses in the UK would be required to include overtime hours in holiday pay. At present, workers in Britain are only compensated for normal working hours during holiday taken. The new initiative would see that any employee that works for longer than their contracted hours could claim additional pay when taking holiday. In addition to this, backdated claims for up to three months will be accepted under the new ruling. The case could still be referred to the Court of Appeal, which could delay the ruling by years.
The same benefit whilst on Holiday
Of the 30.8 million people at work in the UK, 5 million undertake voluntary or compulsory overtime, and the ruling has not made it clear on whether the law would apply to those carrying out voluntary overtime. The ruling did suggest, however, that regular pay should entitle the worker to the same benefit whilst on holiday, which would suggest that as long as the overtime is worked on a regular basis, the employee would still be paid overtime during holiday.
The ruling has been welcomed by many workers across the UK, but many businesses have strongly objected to overtime being included in holiday pay, with many particularly concerned about the implications of back payments. "This is a real blow to UK businesses now facing the prospect of punitive costs potentially running into billions of pounds - and not all will survive, which could mean significant job losses," said CBI director general John Cridland. Many lawyers have forecasted a wide appeal, due to the significant financial ramifications on businesses. Back pay would also be subject to National Insurance Contributions, which would have effects on both employer and employee.
The Impact on the UK MICE industry
In the Meetings, Incentives, Conferences and Events industry, overtime is a part of normal life for many workers. Due to the nature of venues and hotels, operational hours can be 24/7 365 days a year. With so many hours of operation, businesses need workers available throughout the day and night. During a hotel’s normal day, a single employee may be required to work a twelve hour shift to ensure that there is someone available to welcome guests and service and requests. These workers may be paid overtime if the extra hours fall outside of their contracted working times, however as it stands, when the employee takes holiday leave, they will not be compensated for the extra hours that they hypothetically would or could have worked. Under the new proposed legislation, hotels would be required to compensate the employees adequately for the overtime that they carry out on a regular basis, during holiday. This could impact many individuals, corporations and organizations within the MICE industry.
The Employment Cost
Firstly, hotels that are required to pay additional costs for employees may see a decrease in profits, if costs are not cut in other areas. This decrease in profits could lead to a diminished industry as well as a lack of growth within the sector. Companies could, however, off-set the increased employment costs in other ways. Decreasing wages, hiring less people or decreasing operation costs would ensure profit levels were maintained, but this could have a drastic impact on the level of service provided. Less employees, or lesser-compensated employees would lead to a less capable organisation, and this would negatively impact the industry as a whole.
From a positive perspective
There are some positives to the new ruling, however. Employees that benefit from the new ruling will be able to take the holiday that they would like to, and would be compensated fairly for doing so. This would lead to increased employee satisfaction and an overall happier workforce. In many cases, a happier employee is a more effective staff member, so the new ruling could have a positive effect on the service provided to customers by employees. Whether the increased employee satisfaction will match the increased costs in the effectiveness of the employee is unknown, the only thing certain is that the new ruling could cause big changes within the MICE industry.
“Holiday Pay Rulings Tax Issues” – BDO
“Overtime Should Count in Holiday Pay” – BBC -http://www.bbc.co.uk/news/business-29896810
Pay rising faster than prices for the first time in five years, with 30.8m now in work - http://www.dailymail.co.uk/news/article-2831349/Pay-rising-faster-prices-time-five-years-30-8m-work.html