This article was last updated on April 16, 2022
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The Employment Appeal Tribunal (EAT) has ruled on Tuesday that overtime should be taken into account while calculating holiday pay.
The cases were brought forward by small group of workers against three companies arguing that their holiday remuneration was far less than their usual pay because it did not include overtime.
The new ruling is not only a sign of joy for the British workers but also a worrying situation for business firm as it may cost them millions to be paid in compensation.
Before, only basic pay is used to calculate holiday, however, the landmark ruling means that any worker who does voluntary overtime could claim for additional holiday pay. Now, millions of U.K. workers could have the potential right to claim for overtime and commission payments to be reflected in their holiday pay.
Experts have provided some estimation that today’s ruling may result in adding up to billions of pounds, while major employment groups warned this could “wipe out” some small businesses and prove disastrous for economy.
The Northern Ireland Independent Retail Trade Association (NIIRTA) Chief Executive Glyn Roberts has also expressed his concerns regarding the recent judgement by European court and said: “It is not clear if and how employees could claim holiday pay for, and if ultimately they can, how far back this could be backdated. It is a possibility that it could go back to 1998 when the Working Time Regulations were implemented, or it could be limited to six years under the Limitation Act 1980.
“Secondly, which employees will be able to able to bring a claim? If they are required to bring a dispute before tribunal, this would limit the risk to employers as the rule is that claims must be brought within three months of the last underpayment, so it will be difficult for employees who have left employers some time ago to bring claims?
“There is also a worst case scenario which is that the rulings stand the Government changes UK law to make it a requirement of employers to include regular overtime in holiday pay calculations, which is backdated, and also sets up some form of alternative resolution procedure that requires employers to pay.”
Full details of the ruling have not published yet, however it is believed that an appeal can possibly be filed against the ruling, which may also lead to a final judgement held off for a number of years.
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