Holiday pay claims to be limited to two years - Howes Percival comments
In response to the recent decision in Bear Scotland Ltd v Fulton and others, that payments for non-guaranteed overtime must be taken into account when calculating holiday pay, the Government announced a task force would be formed to look into ways of limiting the impact of potential back claims for holiday pay.
Following the task force's work the Government has published the Deduction from Wages (Limitation) Regulations 2014 which will apply to any claims lodged on or after 1 July 2015. Until then the existing rules will apply.
The Regulations limit all unlawful deduction claims to 2 years before the date of lodging a claim.
The Regulations also confirm that the right to holiday is not incorporated as a term of the employment contract. This prevents employees being able to bring contractual claims in the civil courts where the 6 year limitation period applies.
Howes Percival employment law partner Simon deMaid comments: "The Government was very concerned about the effect that large backdated claims may have on businesses following the EAT decision last month and have chosen to act quickly in response to the decision.
"Unfortunately the date of implementation may encourage employees to issue claims sooner rather than later and employers may need to think about taking action now to limit their possible exposure to back pay claims."