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Published on:November 4, 2015Author:The Debt Advisor

In a judgement expected at 10:30 am today, employers across the country will find out whether they cumulatively owe potentially billions of pounds to employees over unpaid holiday claims. If the controversial ruling is upheld, it could see many businesses fall into turmoil as they try to cope with pay dated back as far as 1998.

The Employment Appeal Tribunal will today meet to rule on whether businesses should be forced to backdate holiday pay as far as 1998. In order to do so they will incorporate the Bear Scotland versus Fulton Case which focuses on the interpretation of the EU-wide Working Time Directive, and in particular the Working Time Regulations implemented in the UK in 1998. Whilst also considering Amec versus Law and Hertel versus Wood in the ruling.

The case will have a significant impact on businesses if it goes ahead; figures from the government evidence that around one sixth of the 30.8 million strong workforce in the UK work overtime, which could amount to up to five million works being entitled to further holiday pay, which has not been factored into costs by companies.

However, the government feels a ruling this extreme would be too strong and argue that overtime should not factor into holiday pay calculations. A spokesman for the Department of Business, Innovation and Skills states “The government wants to get the right balance between the needs of employers and employees, and that they are concerned about the potential impact on employers”.

It is felt that the case has pitted the government and employers against unions and employees and it is felt that the ruling will have massive ramifications for businesses across the United Kingdom. Areas of concern for employers are administrative issues in coordinating new holiday procedures, as well as working out holiday entitlement for those that work regular periods of over time. However where the real impact will be felt is backdated claims, The Federation of Small Businesses estimate if successful the ruling will effect up to 400,000 businesses on different scales.

There is frustration for both sides, as employers feel aggrieved given that at the time, they had sought the best advice and guidance on dealing with over time and holiday pay. Unions however, state employees rely on their overtime pay to enhance their earnings and that the holiday pay calculation should therefore include overtime calculations.

Any decision made today is likely to be appealed by either side which be done through the Court of Appeal and if needed, escalated to the EU Courts for clarification.

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