Legal Updates

Holiday Pay – New Regulations Put a Cap on Backdated Claims

Written by Martin Pratt

New regulations will be coming into force on 8 January 2015 which are designed to impose a two year cap on most unlawful deductions from wages claims, including claims for holiday pay, following the EAT decision in Bear Scotland Ltd v Fulton.

The introduction of the Deduction from Wages (Limitation) Regulations 2014 (Regulations) follow concerns that employers could potentially face claims for historic underpayments of “wages” after the decision that commission and other payments intrinsic to work would be included in holiday pay. This would include underpayments of commission, holiday pay, bonuses, or other emoluments attributable to an employee’s employment, whether payable under a worker’s contract of employment or otherwise. The Regulations do not affect claims for deductions of other types of remuneration, such as statutory maternity pay and statutory sick pay.

The Regulations effectively limit all unlawful deductions claims to two years before the date the Tribunal claim is lodged, and apply to all claims presented to the Employment Tribunal on or after the 1 July 2015.

However, employers will be concerned that any worker wishing to claim a series of deductions in respect of “wages” extending beyond two years should ensure that they present their claim to the Employment Tribunal before the 1 July 2015.

Contact the Author

Martin Pratt

Gordon Dadds