Holiday rights extended by Supreme Court

Holiday rights extended by Supreme Court

The Supreme Court have issued a judgement which has the potential to increase an employer’s liability for historic holiday pay

In short, the case concerned the Police officers who had brought claims for underpayment of holiday pay after having historically received basic pay during annual leave.  You will already be aware that holiday pay should include regular overtime.

Prior to this judgement, claims could be made for up to two years’ historic holiday pay, provided each failure to pay holiday was linked by less than three months By linking a series of deductions, each with less than three months between them, a worker could go back and claim up to two years’ holiday pay.

The Police calculated that full cost of the claims would be about £30 million whereas if the claims were limited to underpayments only where linked within three months or less of each other, the cost would be about £300,000.

The Supreme Court has decided that it doesn’t matter if there is a gap of more than three months between a failure to pay, a worker can still claim for up to two years’ holiday pay. That being said, the claim itself still has to be brought within three months of the final failure to pay.

This is important because if there are staff who have claims for unlawful deductions against their employer which go back for two years, then the sums due to staff could end up crippling the business.

According to the Office for National Statistics, the median average salary for all workers in the UK in 2022 was £27,756. For a full time employee, their holiday pay equates to just under £3,000 a year. With even an underpayment of £500 per annum, claimed for two years, a business with 100 employees could face a £100,000 bill.

If you are unsure that you are correctly handling your employee’s holiday pay, then please do not hesitate to contact us and we would be happy to help.

The judgement in the case be read here.