Holiday pay ruling attacked by business groups

A controversial ruling at a tribunal which set a precedent for workers’ holiday pay to be calculated including voluntary overtime has been slammed by business organisations.

The ruling means that millions of UK workers could be eligible to receive back-dated pay.

John Cridland, CBI Director-General, said: “This is a real blow to UK businesses now facing the prospect of punitive costs potentially running into billions of pounds – and not all will survive, which could mean significant job losses.

“These cases are creating major uncertainty for businesses and impacting on investment and resourcing decisions.

“This judgment must be challenged. We need the UK Government to step up its defence of the current UK law, and use its powers to limit any retrospective liability that firms may face.”

The tribunal ruling will result in payouts for businesses, which could add more than 3% to manufacturers’ payrolls, according to research by EEF, the manufacturers’ organisation.

Meanwhile the British Chambers of Commerce also took umbrage at the move. BCC executive director of policy and public affairs Adam Marshall said:  “This ruling is damaging for businesses across the UK. Firms could be at risk of incurring significant financial losses, which could force them to close their doors altogether.

“Managers across Britain are now in the difficult position of having to carry out more complex calculations for holiday pay; estimating overtime and commission rates of staff on holidays. This expanded definition of ‘pay’ is so ludicrous that the government itself has argued against it. No business should have to pay more than base salary during holiday periods, unless they elect to do so.

“What businesses fear most is that these judgments will open the door to backdated claims, which could run into the billions. Firms which have complied with existing regulations are shocked by the thought of having to back-pay holiday entitlements – a change they could not have predicted.

However, the result of the ruling will boost wages for up to five million workers, the Financial Times reports.

Now read:

Social Bookmarks