Holiday Pay Entitlement Decision
4th November, 2014
The Employment Appeal Tribunal has today, 4 November 2014, handed down its judgment in the case of Bear Scotland v Fulton (and conjoined cases).
This decision has been long awaited as it was expected to provide answers as to what really should be included in the calculation of holiday pay. The decision follows a series of cases in which it has been argued that holiday pay should not be limited to only basic salary.
The Employment Appeal Tribunal has now held that:
1. Holiday pay to which workers are entitled should include a sum to reflect normal non-guaranteed overtime, as opposed to basic salary alone.
2. The extension beyond basic salary in holiday pay applies only to the four week entitlement to leave under the EU Directive and not the additional statutory entitlement of 1.6 weeks leave pursuant to UK legislation.
3. Workers will be unable to bring unlawful deduction from wages claims for arrears in holiday pay if there has been a break for more than three months between underpayments. A break of more than three months effectively renders the claim time-barred.
4. Workers who are entitled to travel time payments (exceeding what is actually incurred in expenses) should also see a reflective sum in their holiday pay.
This is an interesting decision and provides some clarity for employers and employees alike. We will however keep an eye out for further updates to this case as leave to appeal to the Court of Appeal has been granted.
In response to this morning’s ruling Vince Cable, Business Secretary, has confirmed that he is setting up a taskforce to consider the impact of the ruling. Interestingly however, a tweet from the BIS Press Office (@Bispressoffice) stated that the taskforce was aimed at “limiting” the impact of the ruling.
The Aaron & Partners Employment Team have been advising a number of businesses and claims management companies on the holiday pay issue for some months and have undertaken detailed work ahead of today’s ruling.
Fellow Employment Partner Claire Brook said “Employers need to assess their payroll and personnel records to determine the potential cost exposure in respect of possible claims and should budget for this additional cost moving forward.”
“Our Employment Team will be pleased to review current policies and practices to advise employers on the options available to them.”
Helen Watson, Head of Employment, said: “While this could be costly to your business, it is unlikely to have the impact we originally feared.”
For further information and advice in relation to holiday pay, please contact the employment team:
Head of Employment Helen Watson
01244 405565 [email protected]
Employment Partner Claire Brook
01244 405515 [email protected]
You might also be interested in...
3rd July, 2020
Brief Background Mr & Mrs Villier married in 1995, and lived in Scotland together until separation in 2012. Once separated, the wife moved to England, but the husband remained living in Scotland. In July 2013 the wife issued a divorce petition in England, but in October 2014 the husband lodged a writ for divorce in Scotland. As the... Read More »
1st July, 2020
Agricultural property relief from Inheritance Tax has long been a valuable relief for estates, which when available can... Read More »
29th June, 2020
In May 2020 the UK Government released additional guidance in connection with the Covid-19 pandemic, this time in... Read More »