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Government acts to limit claims for Holiday Pay arrears

The Government has introduced new regulations to limit claims for unlawful deductions from wages. The Deduction from Wages (Limitation) Regulations 2014 target holiday pay claims in particular and do two things. They –

(1)    limit all unlawful deductions claims to two years before the date the ET1 is lodged; and

(2)    state that the right to paid holiday is not incorporated as a term in employment contracts

The effect of these are that the Employment Tribunal can only consider deductions from wages where the wages from which the deduction was made were paid within the previous two years before the worker brought their complaint in an Employment Tribunal.

In particular these changes relate to complaints in respect of deductions from wages which arise as a result of the employer failing to pay appropriate levels of holiday pay.

The regulations also clarify that that the right to payment in respect of annual leave provided for by the Regulations is not intended to operate in such a way so as to provide that right under a worker’s contract. It is a separate statutory right. The effect is that claims cannot be brought in the civil courts for breach of contract.

Those new provisions will only apply to complaints presented to an Employment Tribunal on or after 1st July 2015.

Simpson & Marwick

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