Holiday Pay Claims to be Limited to Two Years
Following the Landmark EAT Judgment in Bear Scotland Limited and others v Fulton and others, payments for non-guaranteed overtime must be taken into account in calculating holiday pay. The Government set up a taskforce to assess the impact this decision might have on employers. In doing so, the Government announced that it was “taking action to protect UK business from the potentially damaging impact of large backdated claims”.
On the 18th of December 2014 the Government announced the conclusions of the taskforce and implemented the Deduction from Wages (Limitation) Regulations 2014.
The Government recognised that although the EAT had limited backdated claims, as there could not be a gap of more than three months between any “series” of deductions, there was still the possibility that these claims could be brought extending as far back as 1998. This obviously represented a major potential liability for businesses whose employees undertook non-guaranteed overtime.
The new rules impose a two year limitation on all claims for backdated holiday pay claims related to non-guaranteed overtime. These new rules will take effect from the 1st of July 2015.
Obviously this is beneficial for employers as it will limit potentially large claims and will provide a level of certainty as to potential liability.
Until the 1st of July 2015 employees can still bring holiday pay claims that could potentially date back beyond the two year period if the deductions formed a series with any gaps between them being not more than three months. Hence the new rules do not protect employers currently, and will only do so from the 1st of July 2015.
If you are an employer or an employee requiring advice on a holiday pay claim then please contact Daven Naghen head of our Employment Tribunal. Dav can be contacted on 01775 722261, firstname.lastname@example.org or by writing to or visiting our offices at 23 New Road Spalding Lincolnshire PE11 1DH.