Government announces legislation to limit retrospective holiday pay claims to two years
Article date: 28/01/2015
On 18 December 2014, the government announced that draft regulations have been put before Parliament to impose a two-year limitation on unlawful deductions from wages claims in respect of holiday pay. This follows the EAT’s recent decision in Bear Scotland Ltd v Fulton that non-guaranteed overtime must be taken into account when calculating holiday for the minimum four weeks’ statutory annual leave entitlement required by the Working Time Directive. The draft regulations will amend the Employment Rights Act 1996 and will apply to claims presented on or after 1 July 2015.
The limitation will also prevent employees from trying to argue that a failure to pay holiday pay correctly is a breach of contract which would allow them to claim in the civil courts, where the limitation period is 6 years.
The aim of the draft regulations is to reduce potential costs to employers and give certainty to workers on their rights on holiday pay. This news is welcome for employers who were previously concerned about the extent of historical liabilities following the Bear Scotland Ltd v Fulton ruling.
Thanks to Higgs and Sons for sharing this information.
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