The Court of Appeal has released its much-anticipated decision in the Metropolitan Glass & Glazing Ltd v Labour Inspector case, ruling that the Employment Court erred in concluding that payments made by Metropolitan Glass under its STI schemes to employees fell within the definition of “gross earnings” under section 14 of the Holidays Act.
The Court of Appeal found that the key element of the definition of “gross earnings” is that the payment at issue must be one the employer is contractually bound to pay. It concluded that the STI payments were not included in gross earnings because Metropolitan Glass included an express term that even if all conditions were met, it retained the discretion not to make any payment. Therefore the payments were “neither guaranteed nor conditional” and still retained the character of a discretionary payment for the purposes of the Holidays Act.
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