Tuesday, November 4, 2014 About 5 million people could be eligible to collect backdated holiday pay following a historic legal ruling on Tuesday. The employment appeal tribunal ruled that employers must include overtime when calculating workers’ holiday pay after test cases brought by the Unite union against the engineering company Amec and industrial services firm Hertel. The ruling could pave the way for payouts for up to a sixth of the UK’s 30 million workers. Unions welcomed the decision but companies warned that they face a multibillion-pound bill which could put some out of business. The Employment Appeal Tribunal ruled on two cases relating to the UK’s interpretation of the Working Time Directive, including one involving electricians, scaffolders, and semi-skilled operatives who worked on a project at the West Burton power station in Nottinghamshire. Unite said the employees consistently worked overtime, but that was not included in holiday pay, meaning they received “considerably less” pay when on holiday compared to when they were working. Howard Beckett, Unite’s legal director, said: “Up until now some workers who are required to do overtime have been penalised for taking the time off they are entitled to. This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order. “Employers will now have to include overtime in calculating holiday pay, and those that don’t should be under no illusion that Unite will fight to ensure that our members receive their full entitlement.” The Institute of Directors (IoD), the British Chambers of Commerce (BCC) and the Federation of Small Businesses (FSB) have all warned that hundreds of companies may go bust if they are forced to make backdated payments. Mike Cherry, policy chairman of the Federation of Small Businesses, said: “The government must bring in emergency legislation to prevent the backdated claims. [If they don’t act] hundreds of businesses will shut down and that will lead to thousands of employees being laid off. “Business has done everything it could to comply with the law at the time and now to have it changed is totally wrong. Our members are very clear about this – it could have severe implications.” The government, which supports employers in their stance against making the payments, did not immediately comment on how it would respond to the ruling, but a spokesman said: “We understand the deep concern felt by many employers and have intervened in the employment appeal tribunal cases to make our views clear.” Jean Lovett, a partner at law firm Linklaters, said: “The potential financial implications for many employers will be significant. The number of potential claimants across various sectors and industries is vast. “The law on holiday pay has been in a state of flux for sometime. However, we envisage that the [tribunal’s] decision will not be the last word on this issue. As significant sums are involved, we expect the decision to be appealed. “Due to the costs involved many employers may now look to reduce the availability of overtime, where feasible.” John Cridland, CBI Director-General, said: “This is a real blow to UK businesses now facing the prospect of punitive costs potentially running into billions of pounds – and not all will survive, which could mean significant job losses. “These cases are creating major uncertainty for businesses and impacting on investment and resourcing decisions. “This judgment must be challenged. We need the UK government to step up its defence of the current UK law, and use its powers to limit any retrospective liability that firms may face.”
Posted on: Tue, 04 Nov 2014 12:33:43 +0000
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