Last month I posted a blog on the ground breaking Judgment of the Employment Appeal Tribunal in the case of Bear Scotland v Fulton and others on holiday pay and overtime.
Since then there have been two significant developments.
Firstly, the Unite union, which represents the claimants in the Hertel (UK) Ltd v Woods and others and AMEC Group Ltd v Law and others cases (which were joined with the Bear Scotland case), has announced that they will not be appealing the EAT’s decision. This means that, in most cases (and subject to any appeal by the employers), workers claiming underpaid holiday pay will not be able to bring claims stretching back many years.
To recap, the EAT decided that non-guaranteed overtime must be taken into account in calculating statutory holiday pay derived from the Working Time Directive, but limited the extent to which workers can make retrospective claims for underpaid holiday. The effect on historical claims was regarded as the more controversial aspect of the decision from a legal point of view, and was described by Langstaff P as being of “public importance”. Before the decision, employers had been concerned that retrospective unlawful deduction claims for underpaid holiday could go back to 1998, when the Working Time Regulations 1998 came into force.
Unite’s announcement means that workers will not be able to bring claims based on a series of deductions where there has been a gap of more than three months between the deductions. Explaining its decision, a Unite spokesperson said: “We don’t want to bankrupt business; going forward it is about ensuring employees are paid their fair share and working with employers to ensure they get their house in order.”
Secondly, the government has introduced the Deduction from Wages (Limitation) Regulations 2014. These regulations have apparently been discussed with the task force set up by Vince Cable immediately following the EAT Judgment in November, but don’t arise directly from it (make of that what you will). These new Regulations limit unlawful deductions claims to two years before the date that the Claim Form is lodged. It is not entirely clear whether this relates to all deduction from wages claims or only those related to holiday pay.
It is also being reported that the Regulations state that the right to paid holiday is not incorporated as a term in employment contracts (so that failure to pay it would not become a breach of contract).
It is clear that the purpose of these Regulations is to prevent employees bringing long-term claims for back holiday pay, either in the tribunal or civil courts. However, it is very surprising that the new Regulations only apply to Tribunal claims presented on or after 1st July 2015. This seems an open invitation to anyone with a potential long-term backpay claim to spring into action now and submit their claim within the next 6 months.
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