Employment ruling could be costly to businesses

Joanne Holborn
Joanne Holborn

A Lancaster based employment lawyer is advising businesses following a “landmark decision from the Employment Appeal Tribunal.

Joanne Holborn, employment partner at Baines Wilson LLP, said: “Today has seen a landmark decision which has ruled that ‘non-guaranteed’ overtime should be included when calculating a worker’s holiday pay.

“It is essential that employers carry out an assessment to determine whether there is a significant risk of multiple claims as a result of this decision and decide how to manage any potential liability.

Joanne said the decision will affect Lancashire businesses who may now face what could be costly claims from workers for breach of contract or unlawful deduction from wages.

She added: “The outcome of this case has not come as a surprise, as it follows previous decisions which have said that workers should receive their ‘normal remuneration’ during any period of annual leave, that any payments ‘intrinsically linked’ to the performance of a worker’s tasks form part of normal remuneration and that workers should not be placed at a financial disadvantage when taking annual leave.”

The tribunal has ruled that claims must be brought within three months of an underpayment and arrears of holiday pay will be out of time if there has been a break of more than three months between underpayments.”

The Government estimates around 5m workers could be affected by the decision and has announced a taskforce to assess its impact and take any action possible to limit exposure for employers.