Limit Of Two Years For Holiday Pay Back Claims
We reported in November on the ground-breaking case which allowed for voluntary overtime to be included in holiday pay. Now the details for retrospective claiming have been revealed.
The Employment Appeal Tribunal (EAT) ruled in November that workers should have voluntary overtime included in their holiday pay. This was a major announcement for employers which was expected to apply to one sixth of the UK’s 31 million workers.
At the time, however, it hadn’t yet been revealed whether or not claims could be backdated, leading to worried calls from business leaders such as The Federation of Small Business’s Mike Cherry, who at the time said: “The government must bring in emergency legislation to prevent the backdated claims. Hundreds of businesses will shut down (if they don’t bring in legislation) and that will lead to thousands of employees being laid off. Business has done everything it could to comply with the law at the time and now to have it changed is totally wrong. Our members are very clear about this – it could have severe implications.”
Well, Cherry got his wish as the government set up a task force to look into the potential effects of the ruling and the result is that a two year limit will be imposed on back claims for overtime holiday pay which was not paid.
So here’s the important bit:
Any complaint lodged on or after July 1st 2015 will not be entitled to claim for any incorrect deductions made more than two years before the date of the complaint.
Also important is the fact that a clause will be added to The Working Time Regulations 1998 so that workers cannot claim holiday pay which did not include overtime to have been a breach of contract.
In theory, therefore, workers have half a year until July 1st to lodge a complaint if they want to claim as far back to 1998 – which they can do so long as there has not been a break of three months or longer between the underpaid holiday payments.
In general, though, this is good news for employers, who will not be forced to pay out claims going back up to 16 years. And going forward, employers now know where they stand when it comes to holiday pay and voluntary overtime. Find more of our stories that are relevant for human resources managers here.
Photo credit goes to I'm George