New Limit Affecting Holiday Pay Claims

In my 5 November 2014 blog, I commented on a decision of the Employment Appeal Tribunal that holiday pay during the four weeks of annual leave required to be provided to all workers under the Working Time Directive should reflect any pay received in respect of non-guaranteed overtime, including that it seems that many other payments which are intrinsically linked to the performance of a worker's duties must also be taken into account in the calculation of holiday pay.

The Government has now brought in new regulations which will limit all claims relating to unlawful deductions from wages which are brought on or after 1 July 2015 to two years before the date the claim is lodged. The effect of this will be to protect employers from long-term claims for back holiday pay based on the above principles.



Employers Encouraged to Audit Holiday Pay Arrangements

However, until 1 July it will remain open to workers to bring claims for underpayments of holiday pay going back as far as the beginning of their employment or 1 October 1998, whichever is the later. And even when the new limit on the period that such claims can cover comes into effect, dealing with any internal grievances and/or legal proceedings relating to disputes over holiday pay will still be potentially time consuming, expensive and damaging to employment relations. Accordingly, we still encourage employers who have yet to do so to ask us to carry out an audit of their holiday pay arrangements.

For a fixed fee we will identify whether or not current arrangements are in accordance with the Working Time Regulations (or, where applicable, the Agricultural Wages Order) or otherwise the Directive, and indeed your contracts of employment, and make recommendations to reduce or, if possible, avoid future and historical holiday pay liabilities. To the extent you will incur additional costs in order to comply with your legal obligations, we will also make recommendations regarding minimising and/or off-setting those costs.

For more information about a fixed price audit or otherwise advice relating to holiday pay, please contact me on (T: 01952 211 010; email, Chris Piggott (T: 01952 211011; email or Will Morse (T: 01432 377152; email