New regulations for overtime and holiday pay

We recently reported on the decision of the Employment Appeal Tribunal (EAT) in Bear Scotland v Fulton, that holiday pay must include a payment in respect of regular compulsory overtime. Employees can bring claims for unlawful deductions from wages to recover this additional holiday pay. You can read our previous bulletin on this topic here.

A claim for a series of unlawful deductions from wages must be brought within three months of the last deduction. In Bear Scotland, the Employment Appeals Tribunal decided that if there is more than a three month gap between payment for holidays, the claim cannot be backdated any further. Although it was anticipated that this decision would be appealed by the employees, we can confirm that they have decided not to appeal and therefore this is a legally binding decision.

The law has been changed from today to limit the financial consequences for employers. The government has introduced the Deduction from Wages (Limitation) Regulations 2014, which restrict a series of deductions to 2 years. This means that if there is an unbroken series of deductions over many years, an employee can only bring a claim to cover the last two years of deductions. This new time limit will apply to all claims issued on or after 1 July 2015.

The Regulations also confirm that claims for holiday pay cannot normally be brought in the civil courts and must instead be brought in the employment tribunal. This removes the possibility of employees bringing a claim for holiday pay in the civil courts to avoid the time limits in the tribunal.