Holiday pay - backdated claims to be limited to 2 years

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Summary: Following the EAT's decision in the combined cases of Bear Scotland v Fulton, Hertel v Wood and Ors, the Government has announced that it is introducing legislation limiting holiday back pay claims to two years. This is intended to help reduce potential costs to employers.

Following the EAT's decision in the combined cases of Bear Scotland v Fulton, Hertel v Wood and Ors, the Government has announced that it is introducing legislation limiting holiday back pay claims to two years. This is intended to help reduce potential costs to employers and give certainty to workers on their rights.

The Government has laid regulations before Parliament limiting unlawful deductions from wages claims (which is how holiday back pay claims are typically brought) to two years. The new rules will apply to claims made on or after 1 July 2015.

Whilst unlikely to succeed, some commentators had suggested that individuals might try to bring a breach of contract claim in respect of their statutory right to holiday pay, which would have allowed them to claim up to 6 years' holiday back pay. The amending regulations will also clarify that the statutory right to holiday pay doesn't confer such a contractual right.

These amendments are a welcome development for employers, who may wish to bear them in mind when considering the options available to them for dealing with holiday pay issues. Read more general discussion of the holiday pay issues arising from the EAT Bear Scotland decision and the options available to employers here.

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