New holiday pay laws could impact on city businesses – warns leading lawyer

20 Nov, 2014

BUSINESS owners across the city are being urged to have a plan in place and to review their employee contracts in light of the new landmark ‘holiday pay’ ruling.

The advice has come from Peterborough law firm Buckles Solicitors following the recent Employment Appeals Tribunal (EAT) judgement on workers’ ‘new’ entitlement to receive paid overtime as part of their holiday pay.

Partner and head of employment, Giles Betts, says the judgement will certainly have an impact on employers, some of whom may soon be faced with potential pay claims following the ruling.

The EAT decision earlier this month suggests holiday pay should be based on a worker’s normal pay, which may include non-guaranteed overtime if they are regularly required to work extra hours, rather than their basic salary.

An appeal against the decision is expected to be lodged and a final decision may not be made for some time. However, Giles believes businesses need to be prepared to implement the changes.

He said: “There are a number of issues for businesses here, which could be based on whether the ruling impacts on them currently and how they will meet the cost of any back-dated pay claims – as well as considering whether, and how, it affects their working practices in future.

“The judgment certainly will have an immediate impact on employers. It is important that businesses revisit their holiday pay calculations and carry out a full review as a matter of priority in order to identify what remuneration a worker normally receives when attending work.

Giles added: “It will then be important to ensure that, with immediate effect, at least four weeks’ holiday each year is paid in accordance with this EAT ruling.

“Contracts and handbooks should also be reviewed to assess whether or not changes need to be made to holiday pay provisions so that they comply with the EAT ruling.

“Employers may also wish to carry out a review of holiday taken by workers in previous years and the amount paid to them during this leave when compared with the amount which should have been paid to them in order to assess any potential liability for unlawful deductions from wages claims, although the extent that employees may be able to claim for back-pay is still at this stage unclear and it is likely that the Court of Appeal will provide further guidance on this point when they consider the appeal in due course.”

For more information about this or any other aspect of employment law, contact Giles Betts, Buckles partner and head of employment on 01733 888888.

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