Update - Backdated holiday pay claims

The coalition government has introduced legislation to reduce potential costs to employers following the recent court decision on holiday pay.

Last November, the Employment Appeal Tribunal (EAT) ruled that holiday pay should reflect non- guaranteed overtime.

Following that ruling, the coalition government set up a taskforce of representatives from government and business — with no union representation — to assess the financial exposure employers face and how to limit the impact on businesses.

The government hasn’t even allowed the taskforce to finish its work, as it has laid the Deduction from Wages (Limitation) Regulations 2014 before parliament, which amend the 1996 Employment Rights Act 1996 and the Working Time Regulations 1998. The regulations came into force on 8 January.

The changes will apply to claims made on or after 1 July 2015 so workers can still make claims under the existing arrangements for the next six months.

From 1 July, the employment tribunal will only consider backdated claims for holiday pay accrued during non-guaranteed overtime in the two years up to the time the worker brought their complaint to a tribunal.

The regulations limit all unlawful deductions claims to two years before the date the ET1 is lodged (with the exception of certain categories of unlawful deductions claims such as claims for Statutory Maternity Pay, Statutory Sick Pay and guarantee payments, which remain unaffected); and explicitly state that the right to paid holiday is not incorporated as a term in employment contracts.

Ian Fleming, Branch Secretary of UNISON Northumberland County Branch said “the government have repeatedly attacked workers rights and by them making this intervention it will hit workers on the lowest wages the hardest, because it’s those workers who are largely affected by this change in legislation. It is completely wrong that in cases where workers have been illegally paid, they won’t be entitled to claim back all the money they are owed.”

Labour Research Department Volume 77, Issue 1, 8 January 2015
www.legislation.gov.uk/uksi/2014/3322/pdfs/uksi_20143322_en.pdf

www.gov.uk/government/news/government-tackles-businesses-concerns-over-holiday- pay-ruling

www.unison.org.uk/content/ConNewsArticle/5635