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SMEs to Be Impacted by Holiday Pay Decision

This week Axis Telecoms has learned that experts are coming out in droves condemning a decision made by a tribunal over holiday pay, saying it could impact small businesses.

Examining the News Stories Important to Small Businesses

Because Axis Telecoms is a company which strives to supply energy and telecoms to SMEs throughout the UK at the best prices around, we know how important trimming the budget is for your garden variety of small business.

That is why we constantly aim to examine the news stories which could result in SMEs experiencing problems with their profit margins. When we first heard about the holiday pay ruling, we had an inkling that it could result in extra expenses for SMEs; an inkling that has heightened now experts have spoken out.

What is the Holiday Pay Ruling?

The holiday pay ruling is simple, yet effective. A tribunal decided that employers now have to factor overtime and other pay supplements into an employee’s holiday pay. Essentially, this means that said holiday pay will now be required to reflect a workers actual earnings, rather than their basic salary.

For most 9-5 employees, this won’t change much, but for those doing shift work, on a zero hours contract etc., it would make an enormous difference. It means their holiday pay should be worked out on average, not actual, earnings, meaning they will likely be paid more.

Creating Major Uncertainty for UK SMEs

It is precisely this, which according to SMEWeb, has prompted experts such as director general of CBI, John Cridland, to suggest that the ruling will cost British firms billions of pounds and force some to close, especially if it’s applied retroactively.

Cridland said that “these cases are creating major uncertainty for businesses and impacting on investment and resourcing decisions,” and that “this judgment must be challenged. We need the UK Government to step up its defence of the current UK law, and use its powers to limit any retrospective liability that firms may face.”

Educate Yourself about the Holiday Pay Ruling

Cridland makes a valuable point; this ruling creates uncertainty for small businesses throughout the UK that could seriously damage their profit margins. Make sure you are educated about what this ruling could mean for you, to avoid just such a thing depleting your SME’s bottom line.