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Insight

Two year limit on back dating of holiday pay claims

Nick Thorpe
18/12/2014
So, the rumours were right. Following the recent holiday pay ruling in the Employment Appeal Tribunal (EAT) that holiday should reflect non-guaranteed overtime, the Government has announced today that So, the rumours were right. Following the recent holiday pay ruling in the Employment Appeal Tribunal (EAT) that holiday should reflect non-guaranteed overtime, the Government has announced today that it will impose a two year cap on the back dating of holiday pay claims.

Changes will be made to the Employment Rights Act 1996 which will prevent claims for holiday pay stretching back further than 2 years. While the EAT's ruling gave employers some arguments to limit the back dating of holiday pay claims, these changes will give employers much needed certainty in relation to their potential financial exposure and should help to reduce the potential costs to employers.

However, employers are not out of the woods yet. These changes will not be introduced until 1 July 2015. Therefore, workers could still make claims under the existing arrangements over the next 6 months, which will act as a transition period before the new rules come into force, for holiday pay stretching back beyond 2 years. We are therefore likely to see increased activity from unions and employee representative bodies in the New Year seeking pay settlements before the new 2 year cap comes into force.

So, enjoy your holidays; as next year looks like it is going to be another interesting year for us all!

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