You may be aware that in December 2014, the Employment Appeal Tribunal made an important decision concerning worker’s holiday pay and overtime. The position previously was that only basic pay needed to be taken into account when calculating a worker’s holiday entitlement. The Employment Appeal Tribunal ruled that voluntary overtime should count towards the calculation of holiday pay.

Since this decision, the government has introduced the Deduction from Wages (Limitation) Regulation 2014 which:
1. Limits unlawful deduction claims to two years before the date the claim form is lodged at the Employment Tribunal (this excludes certain categories such as claims for Statutory Maternity Pay, Statutory Sick Pay and guarantee payments which remain unaffected); and

2. Explicitly state that the right to paid holiday is not incorporated as a term in employment contracts.

These new regulations have the effect of removing an employee’s opportunity to bring long-term claims for back holiday pay against employers in either an employment tribunal or the civil courts which should be of some reassurance to employers. However, these regulations do not apply to claim forms issued in the Employment Tribunal prior to 1 July 2015 meaning that employees can still pursue significantly backdated holiday claims provided that they can point to an unbroken series of deductions leaving employers at risk. It is predicted that there will be a flood of claims issued at the employment tribunals as workers attempt to submit their claims before 1 July 2015 when the regulations come into force. This begs the question as to whether the regulations will really give much protection to employers.

If you require advice on holiday pay and overtime, please contact Farleys’ specialist Employment & HR department on 0845 050 1958. Alternatively please complete an online enquiry form and a dedicated solicitor will respond to your enquiry.