The “Bear Scotland” case decided that holiday pay should be calculated including overtime even where not contractually guaranteed. The government response has been the enactment of new regulations which will apply to claims issued after July 2015. Those regulations cap the period of back-claiming of most unlawful deductions from wages at two years. (Previously, the view has been that such a claim could potentially be dated back to the commencement of the legislation which gave the relevant right).
It’s understandable that employers will welcome the comfort that this apparently brings. But is that comfort guaranteed?
Back in the distant employment law past, there was a similar law relating to claiming back pay on equal pay claims. The back-claiming period was similarly limited to two years. This was found by the European Court of Justice in the 1999 Levez case to be against the principles of equivalence and effectiveness. When breach of contract claimants in the civil courts could claim back for up to six years, limiting the equal pay related period for similar claims was not an effective remedy. Equal pay law now provides for period of six years for back-claiming.
Given that the right to statutory holiday pay also comes from the EU, isn’t there a pretty good chance that the same effectiveness argument applies here too?
The government apparently take the view that the six month transitional period deals with the effectiveness point – that those with an existing claim will be able to bring their claims for the “full” back period until July 2015. But this change to the law isn’t just about holiday pay – it affects all potential deductions from wages except those related to maternity and certain other family rights. So the transitional period doesn’t really deal with claims for individuals that arise in the future.
Employers: UK legislation has been shown to be wrong according to EU law already in Bear Scotland (and of course in Levez before that). It’s probably a good idea to get your house in order regarding payment of wages, holiday pay etc just in case the two year backstop turns out to be wrong too. And don’t forget that many deductions relate to contractual rights which can be pursued back six years in the civil courts even if not in the employment tribunal.
As a postscript, it’s rather doubtful that the new law will help employers with Bear Scotland type claims, given that one would assume that those with such claims will take advantage of the transitional period and lodge their claims prior to July to take advantage of the “old” law.
Partner, Workwise Legal
This week I watched an old episode of The West Wing, the one when Jed Bartlet decides to run for re-election in the face of personal and political challenges. He doesn’t say as much, but puts his hands in his pockets and smiles, which the viewer knows to mean he’s decided to run.
It made me think that we could all do with a bit of that quiet determination in January and February.
For employers, it might mean embracing those difficult decisions or taking the opportunity to get policies and procedures in order. Getting ahead of the game in terms of new procedural requirements, such as the Shared Parental Leave Regulations, could also be a challenge best met with a decent amount of steely resolve.
For employees, it might mean re-focusing in light of the Government’s restrictions to limit the Bear Scotland v Fulton holiday pay claims, or seeking to turn a redundancy situation into a positive opportunity for a change. I have certainly dealt with several employees recently who have impressed me with their attitude to change.
As employment lawyers, we often find ourselves feeling a bit exasperated with the changing nature of the law. We forget that it was probably one of the reasons why we chose to specialise in employment law in the first place! With the General Election on the way and inevitable employment law changes to come, the start of this year more than ever seems to be our moment to step up with a positive attitude to change and challenges.
My hands are firmly in my pockets.
By Alison Humphry
I was reminded that one should not make assumptions about employer’s views a few weeks back when speaking to a group of small business owners. Playing to my crowd a little, I referred in slightly negative terms to the (sadly true) barrage of bureaucracy that will accompany shared parental leave requests, to which one of the attendees retorted that such a system had worked perfectly well in Scandinavia for years.
We look forward to working with our employer and employee clients on getting good, constructive arrangements in place. But will men and partners avail themselves of the rights? Despite the assiduous amendment of many employee handbooks for “Additional Paternity Leave” rights a few years back, very few men actually seem to have taken the plunge.
Will shared parental leave be any different? Well it might be. It’s a lot more flexible than Additional Paternity Leave, given that it can be taken concurrently with the mother, and in discontinuous periods (subject to certain conditions). This increased flexibility may well increase takeup.
That bureaucracy point is a real one though. The law envisages request letters, notifications, declarations, checks, meetings, and the list goes on. Employers in all sectors would now do well to ensure that they understand the law, as requests can now be made in respect of babies due to be born in April 2015 onwards, and the law applies to employers of all sizes.