New 2 Year Limit On Claims For Backdated Pay

From 1 July 2015, claims for backdated pay, including holiday pay, will be limited to a maximum of 2 years under legislation introduced last week. The Government says the legislation is intended to reduce potential costs to employers and give certainty to workers on their rights on holiday pay.

The new 2 year limit is a reaction to an Employment Appeal Tribunal decision last month that pay for certain statutory minimum annual holiday should include non-guaranteed overtime and other non-salary payments for work done (Bear Scotland Ltd -v- Fulton). That decision followed a number of cases in the European courts in which individuals sought, successfully, to establish that their 'normal remuneration', which might include non-salary payments such as commission, should be used to calculate statutory holiday pay.