The key summary points of the holiday pay cases in the Employment Appeal Tribunal (EAT) are:
• Although the principle ought to be simple (is overtime etc. included in calculating holiday pay?) the intricacies of the law meant it took several QCs to refer to everything from UK law, EU law and even International Labour Standards in making their submissions;
• There appears to be a very good argument that EU law includes overtime for the purpose of calculating holiday pay. UK law is deficient in this regard. The question is whether the EAT can in effect re-write UK law to comply. If it is decided that it cannot be “re-written”, then private sector employers probably avoid any historic liability for incorrect holiday pay;
• If it can be re-written, then the question is how much can employees claim? The EAT will have to decide whether a series of incorrect holiday pay payments is stopped each year when employees take holiday in excess of the EU minimum number of holidays (UK law requires more holidays than the EU level);
• If the series of deductions does go back past one year, how far? 6 years or potentially all the way back to 1998, when the Working Time Regulations came into force?
The judge made no promises as to timing of an outcome and as there will be further written submissions sent in over the summer before the matter is even considered, it is unlikely we will get a judgment much before the end of the year. This would give employers time to potentially change their calculation methods ahead of any judgment. The judgment is likely to become rapidly known by employee representative bodies and increase employee awareness of their rights in this regard.
Take a look at our previous blogs on this topic.