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A two-year limit imposed by the Government on claims for retrospective holiday pay

Following the landmark ruling in Bear Scotland Ltd & others -v- Fulton & others that overtime should be taken into account when holiday pay is being calculated the Government set up a task force last month to assess the impact of a decision.

The first result of this taskforce’s deliberations is a new statutory instrument (SI), the Deductions from Wages (Limitation) Regulations 2014 which amends the deductions from wages provisions in the Employment Rights act 1996 and the Working Time Regulations 1998 and is set to come into form 8 January 2015. This regulation does two things:

1.    Imposes a two-year limitation on all unlawful deductions claims to two years before the date a claim form (ET1) is lodged (with the exception of certain categories of unlawful deductions claims such as claims for SMP, SSP and guarantee payments, which remain unaffected) as opposed to potentially back to 1998; and

2.    Explicitly states that the right to paid holiday is not incorporated as a term in employment contracts and thus ‘does not confer a right under that contract’. This clearly attempts to cut off breach of contract claims for underpaid holiday going back six years in England and Wales.

In effect, the Government’s response to the widely reported decision removes any chances employees may have in bringing long term claims, which can go back to 1998, either in the tribunal or civil courts. However the new Regulations are not applicable to ET1s lodged between now and 1 July 2015– therefore anyone with a potential long-term backdated holiday pay must get their claim in before the 1 July 2015.


This move by the Government is good news for employers, giving them some certainty in moving forward, however it may well trigger a rush of claims from employees who are keen to preserve their long-term backdated holiday pay claims.

Employers should therefore prepare themselves for tribunal claims, especially if their employees’ holiday pattern means that there is not a break of more than three months between holidays.

As always if I can provide you with any further assistance on queries relating to holiday pay or any other issue, please do not hesitate to contact me for a free consultation on 0113 350 4030 or samira.cakali@scesolicitors.co.uk.

Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here. 

Samira Cakali

Samira Cakali is a pragmatic and approachable solicitor advocate with extensive contentious and non-contentious experience in the fields of employment law as well as civil litigation, within a range of commercial businesses from SME’s to multinationals as well as senior executives.

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