Holiday pay review to affect millions

Millions of workers in the UK are expected to receive backdated holiday pay. The Employment Appeal Tribunal (EAT) has received a landmark judgement that overtime will be included in holiday pay. It is reported this decision may potentially cost UK businesses.

Figures show this could affect up to five million workers. Elements of remuneration include commission as well as overtime in calculating the costs of holiday pay.

Businesses, trade unions and the government have been closely following the case leading up to the judgement. All are expecting claims of hundreds of millions of pounds going back over the course of 16 years.

Diane Nicol, partner and head of employment law at Pinsent Masons commented: “HR directors have been aware of this problem for some time but have not always been able to get the necessary traction with their boards that this is a material risk.”

Nicol advised that businesses should assess their payroll and HR records to examine the possible exposure to claims and review their current policies to align with yesterday’s ruling.

However, employment partner at DLA Piper Kate Hodgkiss stated: “The judgement significantly limits the potential for back pay liability for employers.”

The EAT’s decision is likely to be appealed by the European Court of Justice.

                                                                              Halimat Shode
Photo: Aastha Gill