Following the press coverage last week you may already know of the Employment Appeal Tribunal (EAT) decision that ruled workers, as part of their holiday pay entitlement, are also entitled to receive payments in respect of overtime.
The case is seen as a victory for employees if they are working and being paid for non-voluntary overtime as they now have the right to be paid an increased rate for holiday pay. It is significant that employees can claim backdated holiday pay where it has been paid incorrectly, which in almost all cases where it relates to non-voluntary overtime will be the case. Employers will be concerned about the numbers of backdated pay claims that could be received from staff. Many firms are already starting to receive enquiries from individuals seeking advice and representation in light of the EAT judgment.
Backdated holiday pay claims must be based on a series of deductions. It has been suggested (although needs clarification) that a gap in excess of three months in any series of deductions will ineffective break the chain of causation. Employees will need to work out the value of a claim versus the cost before deciding whether to bring a claim. (The current cost of issuing proceedings totals of £390 for the issue fee and hearing fee). In reality, the cost of proceedings is likely to act as a deterrent in some cases, although it should be noted that these fees are potentially recoverable from an employer in the event that an employee’s claim succeeds.
When you receive backdated holiday claims from your staff we recommend obtaining legal advice prior to responding. Claims may become ‘time barred’ three months after the payment of holiday pay at the correct level and that could prove to be an easy way out of a difficult spot for employers. Employers requiring their employees to sign confidentiality undertakings when claims for backdated pay are settled will be of paramount concern.
At Solicitor Employment Law we can advise companies on the options for addressing any queries arising from staff and help you to put in place procedures to protect against future claims. Contact us if you require assistance.