Overview

The minimum amount of annual leave which an employer must provide to a full-time worker is currently 28 days a year (or 5.6 weeks).

  • Bank holidays can still be counted towards the entitlement.
  • The rules extend to employees and all workers covered by the Working Time Regulations 1998, including agency workers.
  • The rules cover England, Wales and Scotland, and similar provisions apply in Northern Ireland.
  • There is a limited ability to carry leave over the four-week ‘European minimum’ from one holiday year to the next, subject to agreement between employer and worker.

The legal principles on which holiday pay is based are complex. Employers must take into account most commission, overtime, bonuses and extra allowances. From a practical point of view, most employers should include many of the extra payments they regularly make to employees when working out the appropriate amount of holiday pay.

Assuming employees are given 28 days’ holiday the extra elements only have to be included when working out twenty days of the employee’s holiday pay. The remaining eight days’ holiday (which is derived from UK rather than EU legislation) does not have to take these extra payments into account in the same way.

As numerous recent cases show the actual legal principles upon which the holiday pay issue is based are complex. New case law is still emerging and appeals ongoing. However in the meantime, employers should review their existing holiday pay arrangements to ensure extra payments are included in holiday payments so that any risk from holiday pay claims is minimised. Certain issues have not been resolved, including what the correct reference period is for calculating commission based holiday pay and how to actually quantify the claim.

Background

Under the Working Time Regulations 1998 all employers should start by calculating holiday pay based on an average weekly wage. This includes any extra payments for Sunday working, not just on normal hours.

Employees are all entitled to a week’s normal holiday pay in respect of each week of their statutory 5.6 weeks’ (or 28 days’) holiday entitlement. A week’s pay is either:

  • The normal rate of weekly pay, if the employee’s hours or pay does not vary, or
  • The average remuneration over the previous 12 weeks if the employee’s hours or remuneration varies.

However, what is normal weekly pay and average remuneration? The position is clear if there is just a basic salary to take into account, but there has been significant uncertainty as to whether overtime and commission should always be taken into account when calculating a week’s holiday pay.

Elements of employee pay

When calculating employee holiday pay it is well established that the following elements should be included:

  • Contractual overtime – the Employment Rights Act 1996 says that pay for a working week includes basic pay and overtime if this is contractual.
  • Contractual bonuses or commission or shift work – if an employee's hours and pay vary perhaps because of bonuses or commission or shift work then the average hourly rate over the preceding 12 weeks takes into account the extra payments.

When calculating employee holiday pay it is established that the following elements should probably be excluded:

  • Discretionary bonuses – bonuses which are definitely not contractual are excluded.
  • Salary sacrifice schemes – any salary that is sacrificed through such a scheme (e.g. childcare vouchers) may be excluded.
  • Pensions, cars, or health cover – a week’s pay will generally not include benefits such as these items.

Overtime issues

Recently, case law has confused matters by suggesting that all overtime both contractual and non-contractual should be included when calculating holiday pay. This includes the following:

  • Compulsory overtime – overtime that an employer can require the employee to do in addition to normal working hours.
  • Guaranteed overtime – overtime that an employee is contractually entitled to receive, and is required to do.
  • Regular non-guaranteed overtime – overtime the employee does regularly, but the employer is not obliged to provide it.
  • Voluntary overtime – overtime that the employer does not have to offer and which the employee does not have to do (the clear trend in the case law is that voluntary overtime which is regularly worked is normal pay upon which holiday pay should be based).

Case law

The leading EU case on this is probably the Court of Appeal and the European Court of Justice decision in the British case of Lock v British Gas Trading Ltd and the leading UK decision is the Employment Appeal Tribunal judgment in the conjoined appeals of Bear Scotland Limited v Fulton and others;Hertel (UK) Limited v Wood and others; Amec Group Ltd v Law and others. This and other key cases are considered below.

The combined effect of those cases is a clear decision that workers' holiday pay for the four weeks' annual leave to which they are entitled under EU law should reflect payments that they receive for overtime or commission the worker would normally earn. The leading case of Lock particularly refers to results based commission payments. The ECJ and UK courts have said that anyone whose income was heavily dependent on commission would suffer a financial disadvantage in the form of lost remuneration following every holiday and so they would avoid taking holidays which was not the intention of the legislation.

Overall, the predominant trend in the case law seems to be that holiday pay should take into account commission, overtime, bonuses and other allowances. Employers should ensure that holiday pay takes these into account.

British Gas Trading Ltd v Lock and another (unreported, UKEAT/0189/15 22 February 2016, EAT)

This case particularly concerned whether commission payments should be taken into account in respect of annual leave required under the Working Time Directive. It eventually reached the ECJ and then the CA. The ECJ and the CA concluded that commission payments must be included in the calculation of holiday pay as it was part of the claimant's normal remuneration. Otherwise employees may avoid taking annual leave.

Commission payments must be included in holiday pay calculations only in respect of the four weeks’ annual leave under the EU Working Time Directive. The payments should be calculated by reference to normal remuneration. However, there was no real guidance on how or over what period holiday pay should be calculated, for example taking into account ‘results-based’ commission. A further appeal to the Supreme Court is expected in 2017.

Other key cases concerning ‘extra payments’ and holiday pay are highlighted below. More information on these cases are available in our holiday pay case law section.

Bear Scotland Ltd v Fulton (EATS/0047/13, 4 November 2014, EATS); Hertel (UK) Ltd v Wood (EAT/0160/14 4 November 2014, EAT); Amec Group Ltd v Law (EAT/0161/14 4 November 2014, EAT) – regular non-guaranteed overtime payments were 'normal pay' and should be included in holiday pay calculations.

British Airways plc v Williams ([2012] UKSC 43, SC) and (Case C-155/10) ECJ – pilots' allowances for the time spent flying must be taken into account for the purposes of calculating the amount to which they were entitled during annual leave.

Neal v Freightliner (ET 1315342/2012 16 April 2013, ET) – a depot worker's enhanced pay premiums when working in excess of the contractual seven hours a day should have been  reflected in his holiday pay rather than just basic salary and it was irrelevant whether the overtime was voluntary or not. However this decision was settled out of court before going to appeal and is not binding as it was only made at an employment tribunal.

Patterson v Castlereagh Borough Council ([2015] NICA 47 26 June 2015, NICA) – voluntary overtime may need to be included for the purposes of calculating holiday pay, according to the Northern Ireland Court of Appeal.

Points for employers

Until further appeals in the Lock and Bear Scotland case, or any higher court decision, or new legislation becomes available, what should employers bear in mind in the meantime? Key points for employers to note include the following:

Essential points

  • The result of the decided cases is that employers should now include additional elements of pay that are regularly received by workers when calculating holiday pay. If there is any doubt about the impact of a particular type of regular payment on holiday pay, then employers may wish to take legal advice.
  • If employees are regularly working overtime, it is likely that overtime is part of their normal hours and should be taken into account when calculating holiday pay.
  • How holiday pay should be calculated in fluctuating circumstances is a matter for the national courts to decide, so it is almost certain that legislation will be amended to reflect all these cases.
  • Employers should examine commission policies to see which additional payments are results-based or part of their workers' salary, or perhaps try to vary commission structures. This will be difficult if these have become contractual, unless the employees agree to a variation.
  • It appears that going forward, aspects of pay that are 'intrinsic' to the performance of the work may have to be included in the calculation of holiday pay. In principle, such payments that are intrinsically linked to the performance of the job might include bonuses, commission, overtime pay (including required non-guaranteed overtime), results-based or performance-related pay, call-out supplements and anti-social hours allowances.
  • The rule that claims for unpaid holiday cannot go back more than three months is not under challenge and will remain in place. The legislation to limit any claims submitted from 1 July 2015 onwards to a maximum of 2 years' back pay for any underpaid holiday pay will also remain in place. (For more information see the related Q&A How far back can employees make retrospective claims for incorrectly calculated holiday pay?).
  • Employers who are currently in discussions with employees’ about calculation of holiday pay can assume that it now seems increasingly certain that regular overtime should be taken into account when calculating holiday pay.
  • Voluntary overtime which is regularly worked by employees should probably be included when calculating holiday pay. Employers may want to consider how often they rely on voluntary overtime and calculate the potential liability.
  • Many employers have already addressed the issue regarding future holiday pay arrangements with employees and trade unions and in some cases past arrangements too.

Additional points

  • Workers' holiday pay should reflect payments that they receive for overtime for the four weeks' annual leave to which they are entitled under EU law, but not the extra eight days holiday under the WTR. The extra eight UK holiday days (which can also be expressed as 1.6 weeks' extra holiday required under UK law) and any additional contractual holiday that employers choose to provide do not therefore have to include extra payments.
  • Employers can therefore pay a higher rate of holiday pay (to include average overtime, commissions etc) for the first twenty days holiday with the remaining eight days being paid at a level not including the extra payments, although the employer can, of course, choose to pay the full twenty eight days at the higher level voluntarily.
  • Employers may wish to reduce non-contractual overtime and commission payments where possible, or factor in a contingency for future liability under holiday pay claims.
  • Aspects of the worker's total remuneration that are intended only to cover costs when performing the task do not have to be included in the calculation of holiday pay.
  • Radius allowances and travelling-time payments do fall within the definition of 'normal remuneration' when calculating holiday pay. However expenses ancillary to travel such as a fares are not included.
  • Employers should consider calculating the average annual amount of commission received by a worker and using this to calculate holiday pay. Averaging a previous month's or year’s commission could be used to determine an appropriate holiday pay. Alternatively employers may base their calculations on workers’ average earnings in the 12 weeks leading up to their holiday. The 12-week reference period is just based on current law, but whether this is the correct reference period in this case will be decided on a later date.
  • The case law does not yet fully address what happens if a 12 week reference period does not reflect what the employee would normally earn.
  • Some employers may be able to prove that their commission scheme already compensates for holidays.
  • Since Bear Scotland, a distinction has been made between 'compulsory' overtime (which does count towards holiday pay) and voluntary overtime which historically did not.
  • The Northern Ireland Court of Appeal has now concluded that voluntary overtime can constitute part of 'normal' working hours and therefore be used to calculate holiday pay as well. The voluntary overtime should be undertaken with sufficient regularity to constitute part of a worker’s normal working hours. Northern Ireland Court of Appeal decisions are not binding on courts and tribunals in England, Wales and Scotland, but they can be used as a as ‘persuasive’ way of interpreting the law. Another test case in England or Wales and Scotland is likely to conclude that voluntary overtime should be taken into account.
  • Bear Scotland concerned regular non-guaranteed overtime which the EAT said should be included in holiday pay. The Lock case uses a similar approach to decide that commission should also be included in the calculation of holiday pay. Further appeals in these cases may decide if there is a distinction between commission and non-guaranteed overtime. Bear Scotland (being about overtime) may not reflect Lock (which is about commission).
  • Further appeals to the higher courts in Lock and Bear Scotland are likely. This will lead to a further long period of uncertainty for everyone

If a part-time worker increases or decreases their hours part way through the holiday year, the employer may need to increase or decrease the holiday entitlement going forwards, but is not required to change the holidays which have already accrued to date.

Reducing hours – If a worker moves from full-time to part-time work they retain the right to the full untaken holiday which had accrued, but had not been taken while they were working full time. The employer is not entitled to adjust the already accrued entitlement to reflect the reduction in working time. However, the on-going holiday entitlement can be recalculated from the point that the working pattern changes.

Increasing hours – Employers should recalculate and increase the holiday entitlement which accrues from the point in time when the hours increase

For example John works five days a week and is entitled to 28 days holiday a year. Exactly half way through the holiday year he decreases his hours to four days a week. As six months have gone by and he has not taken any holiday yet he has already accrued 14 days holiday at that point. Fourteen days holiday would equate to two weeks and four days off when he was working full-time. The employer must not reduce these 14 days already accrued. Once he switches to the four day week then the 14 days already accrued will now enable John to take more weeks off as the leave will now go further and enable him to take three weeks and two days off. The 14 days holiday which has accrued goes further on a part-time basis than it does on a full-time basis, as you need less days holiday to eat into more working weeks.

He will however only accrue 11.2 days holiday as his entitlement for the rest of the holiday year, because of the new hours. This will amount to a further two part-time weeks and 3.2 days off. (This is because of his 22.4 days new annual entitlement is divided by two as this only accrues for the second half of the holiday year.)

Case law

In Zentralbetriebsrat der Laneskrankenhauser Tirols v Land Tirol [2010] IRLR 631 the European Court of Justice (ECJ) ruled that the Austrian government was in breach of EU law because of their legislation which reduced the accrued (but untaken) holiday entitlement of part-timers that had accrued when they were still working full- time. The organisation representing hospital employees won their case that these provisions were contrary to EU directives on part-time and fixed-term work as well as parental leave.

In another ECJ case, Greenfield v The Care Bureau Ltd (C-219/14 11 November 2015) a carer's contract of employment enabled her working hours and days to differ from week to week. She was entitled to 5.6 weeks of leave per year.

In August 2012 the employee was working a pattern of 12 days on, two days off which was an increase from the period before this where she had only been working one day per week. Because she had already taken seven days’ leave in July 2012 when she was working one day a week, which equated to seven weeks off, her employer said she had exceeded her 5.6 weeks’ annual entitlement and her holiday entitlement was exhausted.

The carer brought a claim in the Birmingham employment tribunal for unpaid accrued holiday pay. She argued that her holiday entitlement for the whole year should have been retroactively recalculated and adjusted following the increase in her working hours. The tribunal referred the matter to the ECJ which confirmed that:

  • because the purpose of paid holiday is to enable the worker to rest, the entitlement to paid holiday accrues and must be calculated with regard to the work pattern specified in the contract
  • the entitlement to paid holiday must be calculated by reference to the days, hours and fractions of days or hours specified in the employment contract
  • EU law does not oblige employers to retrospectively increase the holiday entitlement which a worker has already accrued if they increase their hours part way through the year
  • EU law does require that employers to recalculate and increase the holiday entitlement which accrues from when the hours increase
  • on the termination of employment, workers are entitled to a payment in lieu of accrued, but untaken holiday calculated on the same basis as if they had been at work.

Other points for employers to bear in mind include:

  • Technically the ECJ rulings applies only to the 4 week EU minimum holiday entitlement under the Working Time Directive rather than the 28 days entitlement under the Working time regulations. However most employers will recalculate the contractual holiday entitlement from when the hours increase or decrease, even if that is over and above the 4 week EU minimum.
  • Employers who get this wrong may face claims under the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations and the Part-Time Workers Regulations, as well as the Working Time Regulations.

Holidays and sickness absence involve complex issues which have been the subject of high level litigation in the UK and the EU. The short answer to the question is that yes, a worker is entitled to holiday pay during sickness absence (even if they are not entitled to statutory sick pay).

There are three core matters for employers to consider:

  • Are workers entitled to take paid statutory holiday while they are off sick?
  • Are employees who have been off sick for the part or whole of a holiday year entitled to pay in lieu of accrued statutory holiday if their employment ends?
  • Can untaken holiday be carried forward into the next leave year?

The answer to the above three questions is in most cases ‘Yes’.

However the following are the main points to take into account in the light of the ECJ and UK cases referred to below.

Entitlement to leave

  • Workers on sick leave accrue the four weeks’ annual holiday they are entitled to under the Working Time Directive. (This does not apply to all of the 28 days’ paid holiday applicable under the UK legislation.)
  • It is not lawful to provide that the right to annual holiday is lost at the end of a holiday year where the worker has been on sick leave.
  • Employers should not force workers to take holiday while on sick leave or to say use the holiday or it will be lost.
  • An employee who gets sick during pre-arranged annual leave can stop their annual leave, take sick leave, then resume the remainder of their annual leave at a later date.
  • Workers on long term sick leave could potentially accumulate significant periods of untaken leave which should be taken, or paid for, once the worker returns to work or leaves.

Timing of leave

  • The UK's current Working Time regulations state that leave must be taken in the year in which it is due. This now seems inconsistent with the ECJ's judgment in Stringer and subsequent cases so new legislation is needed.
  • Workers must be allowed to take accrued holiday on their return to work.
  • Employers should agree when holiday accrued during sick leave will be taken and make provision for holiday accrued during long-term sick leave to cover any future claims.
  • Accrued statutory holiday not taken due to sickness can be taken at a later date - even if it is during the next holiday year.
  • An employee on sick leave does not have to show he/she was unable to take holiday by reason of his or her illness for it to be carried forward.
  • If a worker has been unable to take holiday within a holiday year due to sickness absence, they may carry over that entitlement only for a set period of time (one EU case suggested 15 months). The European Court of Justice (ECJ) stated that any carry over period must be substantially longer than the leave year; the government will hopefully clarify the length of carry over periods in new legislation at some point.
  • Allowing leave to accrue indefinitely does not achieve the purposes of the WTD in ensuring that workers have proper breaks from work.
  • To actually exercise the right to accrued leave the sick worker should request to take the leave. If they fail to do so within the leave year then some employers have successfully argued that the worker may lose the right to take that leave. However, as case decisions have been contradictory on this, it is probably better practice to address this in sickness and holiday policies and to advise the employee of their entitlement.

Termination of employment

  • Where the employment relationship is terminated, workers are entitled to take the holiday or to any pay in lieu of the holiday which was not taken due to illness. This is the case even where the worker was on sick leave for all or part of the holiday year in question.
  • Workers are entitled to payment in lieu of leave which was not taken due to sickness on termination, even if they have not requested for it to be carried over to another leave year.
  • Workers on long term sickness absence can claim full holiday pay for the whole period of their absence when their employment terminates.
  • The right to carry forward is not unlimited, but the carry over period must be sufficient to allow the right to take leave to be exercised.

Practical points for employers

  • The UK's current WTR state that leave must be taken in the year in which it is due. This now seems inconsistent with the ECJ's judgement in Stringer and subsequent cases so new legislation is needed.
  • Workers on long term sick leave could potentially accumulate significant periods of untaken leave which should be taken, or paid for, once the worker returns to work or leaves.
  • The best practice approach is to suggest that workers take their paid holiday. If workers do not want to take payment for holiday during sick leave then the employer must agree that accrued entitlement may be taken even in a subsequent holiday year. Employers cannot force staff to take paid holiday leave during sickness absence to stop their staff accruing long periods of untaken leave.
  • Employers should continue to ask for certification of illness from any employee who tries to convert holidays into sick leave, and incorporate a standard reporting procedure into their holiday policies.
  • Employers must generally be very careful with workers who are on long-term sick leave as extra costs will be incurred and they are also likely to be protected by the Disability Discrimination Act 1995.
  • Employers must review current holiday policies to remove reference to all untaken holiday being lost at the end of the holiday year, at least as far as those on sick leave are concerned.
  • Employers may amend precedent contracts to contractually limit the carry-over period for leave although a safe period for this remains unclear. (Or the carry over period for untaken leave may be dealt with by collective agreement.)
  • The ECJ cases do not entitle workers to accrue additional contractual holiday during sickness absence, although employers may wish to allow this. If they do not, disability discrimination issues may arise and treating the extra holiday entitlement differently may be difficult for personnel departments to administer.
  • Alternatively, employers may limit any holiday which accrues during sick leave to a maximum of four weeks holiday as long as the relevant policy says so.
  • Employers should budget for future possible claims, resulting from holiday already accrued, but not taken, by workers on long-term sick leave.
  • Perhaps the easiest way to deal with many of the points arising from the cases is to consider both holiday and sickness policies and allow for all contractual and statutory holiday to be carried over for both sick and healthy employees.
  • When an individual is on long-term sick leave only four weeks' annual leave carries over automatically and not the additional 1.6 weeks granted by UK law which exceeds the European minimum of four weeks' annual leave. Employers can therefore choose to limit the holiday that can be carried over to the four weeks' leave from the Working Time Directive in their contracts and absence policies. This is because the ECJ and UK cases only refer to the four weeks holiday under the Working Time Directive. The longer 5.6 weeks' leave under the UK working time regulations or contained in the workers' contractual entitlement does not all have to be carried over unless there is an agreement in place between the parties.
  • However, employers must then decide how to deal with the additional holiday conferred by the WTR (and/or any contractual holiday). This must be dealt with in the sickness or absence policies.
  • Employers may also include provisions stipulating that statutory holiday will be deemed to be taken first. This means that if any holiday has already been taken by an employee then they will have less to carry over if they cannot take all their holiday at a future date because of sickness.
  • Employers with private health insurance schemes should check how this works with paid annual holiday as workers who are absent for years on permanent health insurance could accumulate a considerable right to annual holiday (and pay in lieu). It is not certain if that would be payable by the insurer, but insurers may attempt to deny cover.
  • Any unpaid pay in lieu of annual holiday can be a 'deduction from wages' and it is therefore possible for workers to claim in respect of a series of deductions for up to six years.
  • Employers may face claims from genuine or unscrupulous workers who claim they are sick while overseas on holiday. Holiday and sickness policies perhaps should address this issue. In most cases the issue of whether any holiday has accrued will be addressed when the employee returns from the holiday as scheduled. Problems will arise if the employee says they are too sick to travel. Policies should perhaps provide for notification to the employer on the first day of sickness absence and for obtaining medical certificates (either abroad or if possible on their return). However, setting out a procedure to follow if sick abroad may in itself encourage workers to make fraudulent claims of sickness.

The relevant cases include:

  • Commissioners of Inland Revenue v Ainsworth and others [2005] IRLR 465, CA
  • Stringer and Others v HM Customs (2009] IRLR 214
  • Stringer and others v HMRC [2009] ICR 985, HL
  • Pereda v Madrid Movilidad SA [2009] IRLR 959, ECJ
  • Fraser v Southwest London St George's Mental Health Trust (unreported, EAT/ 0456/10, 3 November 2011, EAT)
  • Lyons v Mitie Security Ltd [2010] IRLR 288 EAT
  • NHS Leeds v Larner [2011] IRLR 894, EAT and [2012] EWCA Civ 1034 25 July 2012. CA.
  • KHS AG v Winfried Schulte (unreported, C-214/10 22 November 2011, ECJ)
  • Sood Enterprises v Healy (unreported, EATS/0015/12 14 March 2013, EAT)
  • Plumb v Duncan Print Group Ltd (unreported, UKEAT/0071/15 18 June 2015, EAT.

Employers should remember that public sector employees can rely directly on Directives, so can insist on taking any untaken holiday due to sick leave in the next holiday year. Private sector employers are not directly bound by ECJ decisions, but could still be subject to tribunal claims that are stayed, pending any claim that the UK Government has not implemented the WTD properly.

Following the clear trend in the relevant case law, employers have been worried that employees or ex-employees could claim enhanced holiday pay going back several years. However, there is both new legislation and case law which limits these back claims.

The basic position is that claims relating to a series of underpayments of holiday can only relate to a series which is not broken by any gaps of three months or more between each underpayment in the two years before the claim is made.

Two-year limit

The Deduction from Wages (Limitation) Regulations 2014 (SI 2014/3322) imposes a two year limitation on unfair deduction from wages claims in respect of holiday pay. Claims concerning holiday pay are limited so that they cannot stretch back further than two years. This is to restrict the potential impact of the recent court decisions on holiday pay, particularly Bear Scotland v Fulton and conjoined cases which confirmed that holiday pay should reflect non-guaranteed overtime. To protect employers from large back dated claims the government quickly introduced the two year maximum cap.

This limitation period is applied only to the first category of deductions from wages under the Employment Rights Act 1996 and only applies to the 20 days annual leave entitlement under the Working Time Directive, not the full 28 days entitlement.

The Regulations also implicitly state that the right to paid holiday is a statutory right and not incorporated as a contractual term in employment contracts (this is to try and prevent employees getting around the two year limit by using the normal six year time limit for contractual claims).

Three-month gaps

As a result of legislation there is therefore a two year retrospective limit. However there is also a three month limit which results from case law. The three month time limit for claims runs from the last of a series of deductions (unless the presentation of the claim was not reasonably practicable within that three-month period). If there were lots of failures to pay enhanced holiday pay going back in time, the employees can claim back for the whole of the last series they were underpaid, unless there was a break of more than three months which breaks the link in back claims. The Employment Appeal Tribunal (EAT) confirmed in Bear Scotland and conjoined cases that any gap of more than three months in a series of deductions would mean that a claim could not be made for those underpayments.

In other words the EAT in the Bear Scotland cases limits historical claims for non-payment of holiday pay. It said that the three-month time limit for deduction from wages applies. This means that the three month time limits for claims runs from the last of a series of deductions (unless the presentation of the claim was not reasonably practicable within that three-month period).

If there were lots of failures to pay enhanced holiday pay going back in time, the employees can claim back for the whole of the last series they were underpaid, unless there was a break of more than three months which breaks the link in back claims. The EAT confirmed that any gap of more than three months in a series of deductions would mean that a claim could not be made for those underpayments. The time limits effectively start again from the next series of deductions. In other words an employee could not refresh old deductions from wages claim simply because of a non-payment occurring more than three months later.

Retrospective claims will therefore be limited in most cases.

As far as ex-employees are concerned, they can claim retrospectively for back holiday pay. However the claim must be made within three months of the date when the deduction was made. So if the last failure to pay was the date when an employee left that employer, the time limit will be three months from their departure date.

(For the logistics of claims that have already been presented see the two practice directions on tribunal claims concerning holiday pay issued by the Presidents of the Employment Tribunals in England, Wales and Scotland.)

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