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Latest Ruling on Holiday Pay

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Parveen Bunglawala, Employment expert at FDR Law Warrington discusses the latest ruling on Holiday pay announced on 4th November 2014

"the Employment Appeal Tribunal (EAT) delivered a landmark Judgment in the case of Bear Scotland v Fulton (with various other conjoined cases). The Judgment sets out that workers are entitled to be paid non-guaranteed overtime as part of their annual leave entitlement.  Until this decision, only guaranteed overtime has been included in the computation of annual leave entitlement. 

The ruling applies to the basic four week leave entitlement and does not apply to the 1.6 week entitlement granted under the UK’s Working Time Regulations.

The decision will have a significant impact on Employers going forward, and could also lead to an influx of claims if Employers resist making retrospective payments for holidays already taken. If there is a gap of less than three months between successive underpayments, then Employees will have the right to recover such successive underpayments through the Employment Tribunals.

A significant limitation from an employee’s perspective is that as the right to non-guaranteed overtime does not apply to the 1.6 week entitlement under the Working Time Regulations, any claims for retrospective payments may be curtailed as Employers will seek to rely on the correct rate having been paid for the 1.6 week entitlement.  Thus employers may establish a gap of more than three months in any claim for successive underpayments

It remains to be seen if the decision will be overturned as the EAT granted permission to appeal to the Court of Appeal."

To discuss how this could affect your business, contact Parveen Bunglawala at FDR Law on 01925 230000 or by email Parveen.Bunglawala@fdrlaw.co.uk