A landmark Employment Appeal Tribunal ruled in November 2014 that all elements of an employee’s normal remuneration (including overtime, shift premiums and other variable payments) must be considered when calculating Holiday Pay. For many employers, this marked a significant change and necessitated a review of their existing approach.
It is against this backdrop that i-Realise undertook a review of Holiday Pay for a major global logistics organisation to ensure compliance with this new Case Law.
This multi-site business had a very large payroll, including a high proportion of employees with pay that varied each week depending on shifts worked and premiums earned.
Payroll processes were complex and varied; there was no standard approach to Holiday Pay and calculations, which were largely manual and made locally.
Neither the Payroll Service provider nor the business itself had a clear picture of how individual sites treated Holiday Pay.
Current Practice. The first step was to understand the current practice for paying Holiday Pay at all of its sites.
i-Realise worked with the business to implement a tracking system to provide details of Holiday Pay by site prior to implementation of new guidelines. This was trained out to the sites, monitored and reviewed.
Strategy and Process. With the strategy and standard process going forward established, a group of key stakeholders from across the business – in Payroll, HR, Finance and Operations – worked with the i-Realise team to develop a standard approach which complied with new Case Law. This was reviewed and signed off by senior management prior to implementation.
Implementation. The implementation of the changes to holiday pay involved impact analysis across the business, system solution definition and process standardisation plus the development of rollout, communication and training plans.
The i-Realise team were involved in every stage of the project; managing the work, acting as subject matter experts and developing the communications and training solutions. They worked closely with the Payroll Service provider and with all levels within the business to successfully implement the changes.
Standard Holiday Pay arrangements were established and agreed, resulting in a consistent approach across the business.
Calculations were automated for most employees, reducing the risks involved with manual calculation.
The majority of employees moved to the standard arrangements on schedule. Any exceptions were identified and follow-up work undertaken to bring them in line with the standard arrangements as soon as possible.
Standard reporting processes were implemented, enabling greater management visibility of holiday pay costs.
In addition, the work to standardise Holiday Pay calculations highlighted the advantages of a consistent approach and automated calculations to the organisation. This led to a drive towards globally aligned operating processes, standard pay rules and consistent use of payroll systems to deliver further significant financial and operating benefits.