Important Holiday Pay Claims Update
- 3 months ruling
12 November 2014: On 4th November 2014 the Employment Appeal Tribunal decided 3 test cases on holiday pay claims.
The judge confirmed that regular additional payments such as overtime should be included in the calculation of holiday pay. The ruling only applies to holiday pay guaranteed under the Working Time Directive which covers the first 20 days of annual leave each year.
This means that going forward employers will have to work out what an employee has actually earned and reflect this in pay when the employee takes annual leave.
The judgement also contained a surprise ruling that significantly restricts the ability to claim back pay for previous underpaid annual leave.
Any claim for unpaid wages has to be made within 3 months of the underpayment. Claims can be made for a series of underpayments, but only if there is less than 3 months between underpayments.
The EAT decision may be appealed but for now any underpayments must be linked by gaps of less than 3 months in order to form a series for back pay claims.
The employee has 30 days annual leave.
Holidays are taken in February 2014, April 2014 and August 2014 totalling 20 days. Payment is made at the end of each month. The underpayment in August is in time if a claim is made before the end of November 2014. However, the underpayment in April is more than 3 months before the underpayment in August, so no claim can be made for earlier underpaid holidays for this employee.
If the employee makes a claim for the August 2014 underpayment, any new underpayments in 2015 could be added to that claim.
The employee has 30 days annual leave.
Holidays are taken in February 2014, April 2014 and July 2014 totalling 20 days and payment is made at the end of each month. The holiday payments are all within 3 months of each other but the last payment at the end of July 2014 is more than 3 months ago, so no claim can be made by this employee.
If there is a new underpayment in 2015, the employee can make a claim within 3 months.
As the examples show, each claim will depend on when each individual has taken their annual leave.
Members who consider that they have a claim should complete a Holiday Pay CASE form without delay.
The branch should forward Holiday Pay CASE forms to the Regional offices on the day they are received.
Thompsons Solicitors will then be instructed to assess the cases and will put claims into the Employment Tribunal were appropriate.
Thompsons Solicitors will write to members explaining the position in relation to their individual claim.
If branches have not done so already, they should lodge collective grievances in relation to underpayment of holiday pay for affected members.
Thompsons have been instructed to work closely with regional and branch officers in relation to ongoing local negotiations.
Any collective settlement proposals should be referred to Suzanne Craig, Legal Officer for advice.
Holiday Pay Claims Important Update
3 November 2014
Since our earlier briefings on holiday pay claims, a number of
employers have attempted to limit their liability for back pay
by including additional money for holiday pay in workers’
This triggers the time limit for claims with the effect that
many claims may go out of time. Where this has been done by a
large employer like a local authority, you will already have received
advice from UNISON.
If your pay now includes an element of additional pay, the time
for bringing a claim will have started from the date on which
you were last underpaid holiday pay. If there are more than three
months since the last time holiday pay did not include additional
sums, then you will be unable to pursue a claim.
Your branch will be sending out a more detailed briefing very
soon, but you should contact them now if you think you are running
out of time because your employer has made additional payments
for past underpaid holidays.
Update on Holiday Pay following 'Lock' case judgement
in European Court of Justice
19 August 2014
UNISON is urging members who think they have been underpaid holiday pay to contact their local branch as soon as possible.
The call follows a decision in May this year by the European Court of Justice which means employees who normally get paid enhancements like overtime, shifts and commission - but not when they are on holiday - might be able to make a claim against their employer.
The judgement is the result of a successful claim by UNISON member
Joe Lock, in what is now being called the 'Lock' case. The court
ruled that paid annual leave is a fundamental social right and
Mr Lock's holiday pay should include any commission which is directly
linked work, in this case for British Gas. The result of this
decision will have important implications for workers across a
wide variety of sectors. In short, the court has said employers
need to assess 'normal pay' for their workers when they are calculating
Mike Kirby, UNISON's Scottish Secretary, said:
"This significant decision confirms what UNISON has been
saying for some time. Holiday pay not only includes a worker's
basic pay, but also other payments like overtime, bonuses and
commission which can be reasonably said to form part of their
normal pay packet.
"We want to work constructively with employers to scope
out the impact of this ruling. Employers will need to look at
the terms and conditions of their staff and realise that current
business models of under-contracting, running on overtime and
the inappropriate use of zero hours contracts are no longer an
Branches are writing to all employers where we have members and
asking what they intend to do in relation to unpaid holiday pay
in respect of additional payments during working time. On a national
level, UNISON is collating responses from employers and will then
decide a strategy on how best to pursue them.
It is not yet clear how many members may be affected, however, it is vital that any members who think they may have a claim get in touch with their local branch as soon as possible.
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