South: Holiday pay ruling – expert comment from Blake Morgan and CBI

Following the employment tribunal ruling that overtime should be taken into account when holiday pay is calculated, Tim Forer, a partner in the employment team at south coast law firm Blake Morgan, said: “This is a bombshell of a ruling that has severe implications for businesses who are now likely to have to set aside large sums of money to cater for underpaid holiday pay.

“The question now remains as to how far back claims by underpaid workers could go. If a worker is successful in establishing that there has been a series of deductions, some claims could go back as far as 1998, the date when the UK Working Regulations were introduced.

“The Government estimates that one sixth of the 30.8 million people in work get paid overtime. That means that around five million workers could be entitled to more holiday pay.

“This ruling does not necessarily mean that it is the end of the matter, as it could be further appealed in the Court of Appeal.

“However businesses in the south region now have a major headache – and some may simply not be able to afford these unexpected payments.”

Also commenting on the ruling 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 Government to step up its defence of the current UK law, and use its powers to limit any retrospective liability that firms may face.”