The government has produced new legislation to cap backdated holiday pay claims to two years.
The legislation can be found by clicking here, but essentially the message is a fairly simple one and claims that holiday pay was underpaid because of the failure to include overtime will be limited to two years whether the claim is made in the Employment Tribunal or in the County Court.
This legislation follows the Bear Scotland case which has stated that employees who are paid overtime are entitled to have that overtime considered in holiday pay calculations. This is simply so that when an employee takes annual leave he or she is not any worse off in their pay-packet because of taking a holiday. While this is good news for employees it is a potentially huge cost for employers, especially if the employer could claim for several years in the past.
The legislation comes into force on 08 January 2015, but only affects claims made to an employment tribunal after 01 July 2015 so essentially there is a six month window for someone to get a claim in and hope that the Bear Scotland case gets appealed.
In the long term this mean that claims can only be backdated for a maximum of two years so that should give some comfort to employers who will, at least, know the maximum that they could be in line to pay.
The employment experts at Premier Legal can offer advice on how you can limit claims, what you should be paying and how to handle any claims for backdated holiday pay that you receive. Call us on 0845 070 0505 (Please note: Calls to this number will cost approximately 4p per minute plus your telephone company’s access charge) (Please note: Calls to this number will cost approximately 4p per minute plus your telephone company’s access charge) or speak to someone at out head office on 0115 988 6211.