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3 December 2014 0 Comments
Posted in Employment, Opinion

Certainty of limit to respective holiday pay claims

Author headshot image Posted by , Partner

Many will recall the much-publicised Employment Appeal Tribunal decision on holiday pay recently regarding the requirement to include non-guaranteed overtime when calculating statutory holiday pay where overtime is sufficiently frequent to constitute “normal” pay.

However, fortunately for employers, the judgment limited the extent to which these claims could be retrospective. The claimants involved in this aspect of the decision were granted permission to appeal against the limitation on retrospective claims on the basis that it was considered to be of “public importance”.

Prior to the decision, there was a major concern that retrospective unlawful deduction from wages claims could stretch as far back as 1998, when the Working Time Regulations 1998 came into force (which implemented the Working Time Directive, the EU legislation from which, ultimately, this EAT decision has emanated).

The judgment limited the ability to bring retrospective claims by stating that these could only brought where there was less than three months between one potential unlawful deduction and another, the last of which must be within three months of lodging the claim.

Unite the union, acting on behalf of the two claimants concerned with this aspect of the judgement, have announced that they will not, after all, be appealing. This means that it is now settled law that workers will not be able to bring claims based on a series of deductions where there has been a gap of more than three months between potential deductions.

This will be very welcome news to employers because there was a risk that, had their appeal succeeded, there would have been a run on claims for unlawful deductions for wrongly calculated holiday pay going back years.

In announcing its’ decision, a spokesperson from Unite, said: “We don’t want to bankrupt businesses” – which just shows the impact they thought it could have had. This decision will be welcome news for employers because retrospective claims going back a number of years could have had a devastating financial impact, especially on small businesses.”

After the judgment was published, the Government announced that it intended to set up a task force to assess the impact of this decision on businesses and how this might be limited. Despite the blaze of glory, however, to date there has been no official announcement on the progress of this task force.

For more information on holiday pay claims, contact the Royds employment team today.

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