Holiday Pay Update – Backdating claims will be capped at two years

We reported that Unite had confirmed that it would not be appealing the Employment Appeal Tribunal judgement in Bear Scotland Ltd v Fulton and Others (see here). The government has added further clarity to the situation by introducing the Deduction from Wages (Limitation) Regulations 2014, which came into force on 8 January 2015.

The new Regulations introduce a cap of two years for backdated claims. This means that in cases where there has not been a break of more than three months between periods of successive annual leave, employees will only be entitled to go back two years in any claim issued in respect of holiday pay. A word of warning though – the two year cap only applies to claims made after 1 July 2015. Until then an employer’s liability remains potentially exposed.

It has also been confirmed that the Working Time Regulations will be amended so that the right to paid leave is not to be incorporated as conferring a contractual right under an employment contract. This final point is important as it prevents employees from claiming breach of contract where they have not received the correct holiday pay. If they were able to bring such a claim as a breach of contract claim, this would enable them to claim back as far as 6 years.

For further information on this case or holiday pay generally, please contact Ronnie Tong, or your usual contact in the Employment Team at Devonshires.


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