John Lewis felt the effects of holiday pay miscalculations, help ensure your business doesn’t

By Sam Thomas | 25th April 2016 | 14 min read

Holiday pay is changing. The way UK companies calculate holiday pay for their employees will see huge changes over the coming months and years, as the results of two major court cases will see overhauls in how businesses calculate the amounts for their                                                                               employees.

Back in 2015, employees of John Lewis shared around £22m as the company reacted to the changes in holiday pay, this also came 18 months after the company were forced to pay £40m in owed holiday pay, after admitting that it had miscalculated the amount for seven years. The company were miscalculating holiday pay for their employees in light of the Employment Appeal Tribunal’s most recent ruling, and thus had to backdate the payments. John Lewis have since taken steps to change its pay practices and have adapted to the changes in holiday pay.

To date, the case of John Lewis remains perhaps the most high profile case of holiday pay miscalculation and is back in the spotlight due to the Employment Appeal Tribunal’s recent ruling on the case of Lock vs. British Gas. Mr. Lock, a salesman at British Gas, argued that by taking holidays, he was losing out on commission, because his holiday pay calculations were on his base salary only. He argued, and won, that a person shouldn’t be worse off financially by taking holidays. This case, along with Fulton vs. Bear Scotland which centred on overtime, have completely changed the process of calculating holiday pay.

With all of the changes concerning holiday pay, why not get your business ahead of the legislation? IRIS have developed the industry-leading IRIS Holiday Pay Module, which automatically calculates the correct amount of holiday pay for each of your employees, based from their total earnings over the previous 12 weeks, at the touch of a button when you run your payroll.

This easy-to-use process will save you time and reduce errors when calculating employees’ entitlement to include their total earnings over the previous 12 weeks. There are no complex processes to run and no additional man power needed; it’s all taken care of within payroll.

If you’re interested in finding out more about holiday pay, download our free holiday pay infographic to learn the key facts behind the legislation, and also look at the 9-page guide, “The 4 crucial things you must know about holiday pay”.

The free guide covers the four crucial elements around calculating and implementing a holiday pay solution, why you must take a proactive approach, don't leave things to chance, and how IRIS can help you.

Download your free guide using the button below, and learn how IRIS can help your business avoid a similar situation to John Lewis, and get ahead of holiday pay.

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