Shropshire law firm welcomes holiday pay claims change
13th January 2015
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New legislation that means backdated holiday pay claims by employees will be capped at two years has been cautiously welcomed by employment law experts in Shropshire. 

Solicitors at one of Shropshire’s largest legal firms, Lanyon Bowdler, have previously warned that a recent ruling to allow overtime to be included in backdated holiday pay could be disastrous for some businesses.

And now lawyers say that because the new cap only applies to claims brought on or after 1 July, the door still remains open for employees to bring claims covering a longer period.

In one high profile example of the scale of the potential liabilities facing some employers, John Lewis voluntarily paid £40 million to its staff in relation to underpayments of holiday pay.

John Merry, head of employment law at Lanyon Bowdler, said: “The Employment Appeal Tribunal (EAT) ruling in November 2014 remains potentially very damaging for businesses because it could expose them to claims for substantial sums of money.

“Once the two year cap comes into effect, it will considerably lessen the exposure to liability for businesses who continue to not reflect such things as overtime pay, shift payments and commission in their employees’ holiday pay.

“However, until 30 June it will continue to be open to affected employees to bring statutory claims for backdated holiday pay going as far back as October 1998 when the Working Time Regulations came into force.

“Employers should also bear in mind that where any contracts of employment stipulate that holiday pay will be calculated in accordance with the Working Time Regulations, breach of contract claims for underpayments will not be subject to the two year cap, and will continue to be able to go back as far as six years.”

Mr Merry said Lanyon Bowdler had worked with a number of businesses across Shropshire to ensure that any impact of the EAT ruling was avoided by having sound holiday pay arrangements in place.

He added: “Any employer facing a claim should take legal advice from an employment law specialist, particularly as there are technical arguments - including in relation to the calculation of losses and linking of underpayments - that might enable them to avoid, or at least significantly reduce, liabilities.”

Lanyon Bowdler is one of the largest legal firms in Shropshire and Herefordshire, with more than 200 people and 23 partners in offices at Shrewsbury, Telford, Oswestry, Ludlow and Hereford.

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