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Landmark holiday pay ruling

Posted: November 8, 2014

Workers have won an important case at the Employment Appeal Tribunal that overtime should count when calculating holiday pay.

The Employment Appeal Tribunal ruling could result in some people claiming for additional holiday pay – as well as making backdated claims but only for a limited period.

Employees will not be able to claim more than three months after the last incorrect payment.

Currently all employees are entitled to holiday pay but most employers use only an employee’s basic pay to calculate how much this should be. The case centred on workers who regularly worked overtime and who claimed their holiday pay should be higher to reflect this.

The tribunal ruled on three cases – road maintenance company Bear Scotland versus Fulton, engineering firm Amec vs Law and industrial services group Hertel vs Wood. The employees won their original claims and the tribunal has now rejected the companies’ appeals.

However a final decision on these matters could be a number of years away if the ruling is referred to the Court of Appeal.

After the ruling, Business Secretary Vince Cable said he would be setting up a task force to assess the impact of the ruling. “Government will review the judgment in detail as a matter of urgency,” he said.

“To properly understand the financial exposure employers face, we have set up a task force of representatives from government and business to discuss how we can limit the impact on business.”