Workers In Landmark Holiday Pay Decision Will Not Appeal

We reported in our Employment Bulletin on 13 November 2014 on the landmark holiday pay decision of the Employment Appeal Tribuntal ("EAT") involving the joined cases of Hertel (UK) Ltd -v- Woods and others, AMEC Group Ltd v Law and others and Bear Scotland Ltd -v- Fulton and another.

It has recently been confirmed that the Unite union, which represents the Claimants in the Hertel (UK) Ltd cases, has announced that they will not be appealing the EAT's decision. This means that, in most cases (and subject to any appeal by the employers), workers claiming underpaid holiday pay will not be able to bring claims stretching back many years.

The EAT decided that non-guaranteed overtime must be taken into account in calculating statutory holiday pay derived from the Working Time Directive, but limited the extent to which workers can make retrospective claims for underpaid holiday. The effect on historical claims was regarded as the more controversial aspect of the decision, and was described by the Judge as being of "public importance". Before the decision, employers had been concerned that retrospective unlawful deduction claims for underpaid holiday could go back to 1998, when the Working Time Regulations 1998 came into force. This would have created significant potential liabilities for employers.

Unite's announcement may come as a surprise to some. It is certainly good news for employers. It means that workers will not be able to bring claims based on a series of deductions, where there has been a gap of more than three months between the deductions.

The rationale for the decision has been described by a Unite spokesperson who said: "We don't want to bankrupt business; going forward it is about ensuring employees are paid their fair share and working with employers to ensure they get their house in order."

Unite was not involved in the Bear Scotland case, which was heard together with Hertel and AMEC. However, that case has been remitted to the employment tribunal and the parties were not granted permission to appeal.

This announcement does limit some of the uncertainty that remained following the decision in relation to the potential liabilities employers might face.  It gives employers a clearer direction. As such 2015 will be a good time for employers to assess their current holiday pay arrangements and decide on the approach to take. For a fixed fee we can review your current holiday pay arrangements, identify any legal risks and make recommendations about what actions to take.

If you would like further advice about employment tribunal claims, please contact a member of the Employment team.