Press release

Government tackles businesses’ concerns over holiday pay ruling

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Government has taken action to reduce potential costs to employers and give certainty to workers on their rights on holiday pay.

The government has today (18 December 2014) taken action to reduce potential costs to employers and give certainty to workers on their rights following the recent court decisions on holiday pay.

Last month the Employment Appeal Tribunal ruled that holiday pay should reflect non-guaranteed overtime.

The government recognises the decision of the court and is today taking action to protect UK business from the potentially damaging impact of large backdated claims. Changes made to regulations under the Employment Rights Act 1996 will mean that claims to Employment Tribunals on this issue cannot stretch back further than 2 years.

Workers can still make claims under the existing arrangements for the next 6 months which will act as a transition period before the new rules come into force. The changes apply to claims made on or after 1 July 2015.

Following the recent Employment Appeal Tribunal ruling, government set up a taskforce of representatives from government and business to assess the financial exposure employers face and how to limit the impact on businesses.

Employers and workers can also visit Acas for the latest free Acas advice on holiday pay.

Notes to editors:

  1. The judge in the recent UK Employment Appeal Tribunal case of Bear Scotland versus Fulton ruled that holiday pay should include non-guaranteed overtime.
  2. Non-guaranteed overtime means overtime that employers are not obliged to offer but a worker has to work if it is offered.
  3. Regulations to limit claims for unlawful deductions from wages to 2 years have been laid today (18 December 2014). The rules apply to Employment Tribunal claims made on or after 1 July 2015. Claims made before this time follow current rules.
  4. The taskforce is considering the impacts on business. While the government discussed these changes with the taskforce, they do not represent a direct output of the taskforce’s work. The taskforce continues to work through the implications. The business representative groups on the taskforce are:
    • Confederation of British Industry (CBI)
    • EEF, the manufacturers Organisation
    • Federation of Small Businesses (FSB)
    • Institute of Directors (IoD)
    • British Chambers of Commerce (BCC)
    • British Retail Consortium (BRC)
    • Civil Engineering Contractors Association (CECA)
    • GC100 - General Counsel and Company Secretaries working in FTSE 100 companies
  5. The Department for Business, Innovation and Skills (BIS) chairs the group. Relevant government departments also attend. BIS is also engaging with a wide range of interested parties.
  6. Employers and workers can also get free advice and support from the Acas Helpline Online