04 November 2014 #Employment
Today the Employment Appeal Tribunal released its judgment in the three conjoined holiday pay cases.
The Bear Scotland case (road construction and maintenance in Scotland) related to non payment of overtime and other payments associated with work in calculating holiday pay.
The Hertel and Amec cases (construction) related to non payment of overtime an calculation of payment in lieu of notice on termination of employment.
The EAT made the following findings:
(a) Once holiday pay is correctly paid, if a claim in respect of historic arrears is not brought within three months of the last historic deduction, the claim for historic arrears would be out of time – subject to any argument that the time limit should be extended based on individual circumstances if it was not reasonably practicable to bring the claim in three months
(b) If an employee has not taken holiday leave in any three month period or been paid holiday pay, and did not bring a claim within three months of the last deduction, that would break the series of deductions such that a claim could not go back any further.
(c) It is arguable that correcting arrears of holiday pay going back three months would also break the series of deductions and prevent a claim going back further. However, there is EAT authority saying late payment will still count as a deduction. The point was not relevant to these appeals and was not dealt with. Hence, there remains considerable doubt on the issue.
The EAT found that whether there has been a series of deductions or not is a question of fact. “Series” is an ordinary word, which has no particular legal meaning. Some guidance was provided on the issue. For there to be a series, there needs to be both a sufficient factual link and a sufficient link in time.
It is likely that existing holiday pay claims in the tribunal that have been stayed will likely remain stayed pending further appeal.
It is not known whether there will be any intervention from government in respect of the back pay issue. However, Business Secretary Vince Cable has today (4 November 2014) announced he is setting up a taskforce to assess the possible impact of the ruling on holiday pay from the Employment Appeal Tribunal.
The taskforce will consist of a selection of government departments and business representative groups. The taskforce will provide a forum to discuss how the impact on business can be limited.