Supreme Court Makes Claims for Underpaid Holiday Pay Easier

Over the years there have been claims at the Employment Tribunal regarding holiday pay and employees claiming that they are not being paid the correct rate of pay for their holiday pay. For example, employees who are regularly paid overtime, bonuses and commission should have their average pay and not basic pay taken into account when calculating holiday pay in at least 4 weeks of their paid holiday.

However, following an Employment Appeal Tribunal decision in 2015, previously where any two underpayments of holiday pay were more than three months apart, this was considered to be a break and the employee couldn’t then go back any further in time with their claim. Under this ruling, employers had some assurance that if there was a gap of more than three months between each underpayment or, there had been a correct payment in-between the underpayments, this would potentially limit the value of the claim.

However, the UK Supreme Court has now ruled that employees can in fact claim for a series of underpayments of holiday pay, even when there has been a gap of more than three months. This case reverses the landmark decision from the Employment Appeal Tribunal back in 2015.

This most recent case has now changed the perimeters of how far back claims can be made and means that there is no longer the requirement to have less than three months between each underpayment for it to count as a sequence.

This is a significant decision and serves as a warning for any employers who are still paying employees with regular variable earnings basic pay only for their holidays, and that this decision potentially increases the amount of compensation employees might be able to claim.

If you would like any further information on this article, or would like to discuss your employment law and HR matters, please don’t hesitate to contact at hello@alphr.uk and we will be delighted to help you.