Government Acts Following Overtime and Holiday Pay Ruling

The Government has taken action to reduce the potential costs to employers of last month's decision of the Employment Appeal Tribunal in Bear Scotland Ltd. v Fulton that holiday pay should reflect non-guaranteed overtime that is routinely worked.

The Deduction from Wages (Limitation) Regulations 2014, which are due to come into force on 8 January 2015, make changes to the Employment Rights Act 1996 and the Working Time Regulations 1998 so as to limit Employment Tribunal (ET) claims on this issue to the two-year period before the date on which the employee's ET1 claim for unlawful deduction of wages is lodged. There is to be a transitional period before the new rule is introduced. It will only apply to complaints presented to the ET on or after 1 July 2015.

The Regulations also state that the right to payment in respect of annual leave is not intended to operate in such a way so as to provide that right under a worker’s contract. It is a separate statutory right.

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