Government takes action to protect UK businesses over holiday pay ruling
The government has recently taken action to minimise the potentially damaging impact of the recent ruling from the UK’s Employment Appeal Tribunal (EAT) that holiday pay should reflect non-guaranteed overtime, by introducing new legislation. The Deduction from Wages (Limitation) Regulations 2014 were laid before Parliament on 18 December 2014. These Regulations:
- limit all unlawful deductions from wages claims to two years before the date of claim (with the exception of certain categories of claims such as statutory sick pay, statutory maternity leave and guarantee payments, which will not be affected); and
- state that the right to paid holiday is not incorporated as a term in employment contracts.
The aim of this legislation is to reduce the potential costs to employers and provide clearer guidelines to employees over their holiday pay rights.
It is worth noting, however, that the new Regulations do not come into force until 1 July 2015, and therefore only apply to claims made on or after this date. This means that employers should be aware of the possibility that employees may still make claims under the existing arrangements until the summer.
For more information on the impact of the recent holiday pay ruling, ACAS provide useful guidance which can be accessed on the ACAS website – https://www.acas.org.uk/holidaypay.