Holiday pay claims to be limited to two years - DAC Beachcroft

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Holiday pay claims to be limited to two years

Published On: 19 December 2014

In November, we reported the decision in Bear Scotland Limited v Fulton, where the EAT confirmed that regularly worked, mandatory overtime should be included in holiday pay. Click here and here to see our alerts.

Yesterday, the Government introduced new Regulations designed to limit the potential costs of holiday pay claims to employers and to give certainty to workers on their rights.

The Regulations:

  • Limit all holiday pay claims to two years before the date the claim is lodged; and
  • Expressly state that the right to holiday pay is not incorporated as a term in the employment contract.

What does this mean for employers?

The effect is to remove any chance workers have of bringing long term claims for back holiday pay, either in the tribunal or the civil courts. However, the new Regulations don't apply to claims lodged before 1 July 2015. Employers are likely to receive a flood of claims now by workers with potentially long term back pay claims who wish to beat the deadline.

A worker may wish to add further claims if their holiday pay continues to be paid incorrectly. The effect of the Bear Scotland case was that a new claim would have to be issued and a fee paid for each extra claim, but the tribunals have issued a presidential direction indicating that a worker can simply amend their original claim, rather than issuing a new claim and paying an additional fee.