Government taskforce to assess the possible impact of decision
The Bear Scotland ruling on voluntary overtime may not be as bad as employers fear, lawyers have said.
The Employment Appeal Tribunal held that employers must include voluntary overtime when calculating statutory holiday pay for their workers, in Bear Scotland v Fulton UKEAT/0161/14/SM. Employers raised concerns at the prospect of a hefty and potentially backdated bill that they had not budgeted for, with some fearing it could stymie expansion plans.
Donna Martin, employment solicitor at Mackrell Turner Garrett, says it has been “estimated that approximately 5 million workers in the UK could be entitled to more holiday pay at a potential cost to companies of billions of pounds” as a result of the ruling.
However, Jessica Corsi, partner at Doyle Clayton, says: “The impact will be nowhere near as serious as many feared, due to the Employment Appeal Tribunal’s (EAT) ruling on how far back claims can go.
“The EAT ruled that once there has been a gap of three months between deductions, workers will not be able to bring a claim in respect of earlier deductions. This puts severe limitations on how far back claims can go. For example, if a worker took holiday in January this year, then a further period in April and then took no further holiday until August, the only claim he can bring now will be that he was not paid correctly for the August holiday.
“This is likely to put to bed concerns for most employers that they could be facing claims going back to 1998 when the Working Time Regulations came into force, or the start of employment if later.”
She adds that permission has been granted for an appeal so “the question of how far back claims can go is still up for grabs”.
Before this case, employers had to include compulsory overtime only when calculating holiday pay.
Udara Ranasinghe, partner at DAC Beachcroft, says: “Employers who have not already received significant demands for payment or substantial legal claims should quickly brace themselves to do so.”
Business secretary Vince Cable is setting up a taskforce of government departments and business representative groups “as a matter of urgency” to assess the possible impact of the ruling.
