No Appeal Against Overtime Back Pay Ruling

It is understood that Unite has confirmed there will be no appeal against the Employment Appeal Tribunal’s ruling which limited a worker’s ability to claim past underpayments of holiday pay.

Earlier this month, the Employment Appeal Tribunal ruled that compulsory non-guaranteed overtime has to be included when calculating the amount of holiday pay due to a worker for the first 4 weeks of their statutory holiday entitlement. Non-guaranteed overtime is overtime which an employer is not obliged to offer but which a worker must work if asked.

However, it limited the ability of workers to claim for past underpayments by ruling that claims will be out of time if there has been a gap of more than three months between underpayments. In other words, once a worker has worked for three months after taking his holiday (and assuming he is paid correctly for those three months), he loses the right to claim for the earlier underpayment.

Unite has told WSB that it wants to ensure that businesses pay workers correctly going forwards but has no intention of trying to bankrupt businesses by seeking to recover underpayments of holiday pay going back years.

This is good news for employers. Liability for past underpayments is likely to be small in the vast majority of cases and employers who start including compulsory non-guaranteed overtime in holiday pay going forward will be limiting any liability for arrears. 

Employers who have already received claims should seek to settle them now. 

This is unlikely to be the last word on the matter, but we will now have to wait for another case to reach the Court of Appeal, if the EAT’s ruling is to be overturned. However, there is still a possibility that claims could be brought in the civil courts as breach of contract claims where arrears could be awarded for six years. Although there have been indications in previous cases that claims cannot be brought in the civil courts, this issue has yet to be tested. 

It has not been reported whether the employers are going to appeal the ruling that non-guaranteed overtime has to be included in holiday pay.