Jo Tindall’s Update on Holiday Pay
December 22, 2014
The Government has introduced regulations which limit all unlawful deductions claims in relation to backdated holiday pay to two years before the date any claim is lodged, and which explicitly state that the right to paid holiday under the Working Time Regulations is not a term in employment contracts.
The effect of this is to remove the prospect of employees bringing claims for back holiday pay going back more than two years, either in the tribunal or civil courts. However, the downside is that the new Regulations don’t apply to ET1s presented before 1st July 2015. This six month delay period in implementation is intended to gives workers a real chance to put in their claims before the limitation period applies.
We may well see a spate of claims in the New Year. However, in our view, many claims for historic underpayments are likely to be out of time or only go back for a limited period, since claims for underpayments would only relate to Working Time Directive holiday entitlement. Therefore, employees will normally have been paid for the additional element of annual leave under the Working Time Regulations 1998 at the “correct” rate at some point during the previous holiday year. That would mean, at least according to the EAT in the recent Fulton v Bear Scotland case , that in most cases workers will not be able to establish a continuous series of deductions.