The cost of taking a holiday

by Lara Murray

Do you regularly work overtime? You may not know, but at the end of last year, an Employment Appeal Tribunal (EAT) established that some types of overtime now have to be included in the calculation of statutory holiday in order to comply with the Working Time Directive and Working Time Regulations 1998. 

So, if your employer has not taken overtime into account when calculating how you should be paid when you are on holiday, you may be able to bring a claim in an employment tribunal to recover the underpayments.

The time limits for bringing claims are strict and you must take action without delay if you believe you are entitled to make a claim. Furthermore, the government has announced measures that will restrict the number of months back pay for underpaid holiday that can be claimed; these restrictions will come into force on 1 July 2015.

Under the current arrangements, workers can claim for more than two years’ of past underpaid holiday pay but this will be limited to two years from 1 July 2015.

Business Secretary Vince Cable has announced that he is setting up a taskforce to assess the possible impact of the ruling on holiday pay. He said: “Government will review the judgment in detail as a matter of urgency. To properly understand the financial exposure employers’ face, we have set up a taskforce of representatives from government and business to discuss how we can limit the impact on business.”

In the UK, there are approximately 30.8 million people in employment, of which five million regularly work voluntary or compulsory overtime. Furthermore, the Office for National Statistics reports that 23% of full-time working men and 12% of full-time working women regularly do overtime in the UK. Businesses therefore face the prospect of potentially billions of pounds in compensation claims.

If you think that you have grounds to make a claim and would like assistance with this or any other employment law issue, please contact our specialist team by visiting: www.palmerslaw.co.uk/our-services/employment-law/.