The Employment Appeal Tribunal’s landmark ruling that holiday pay should be defined to include regular overtime has been criticised by politicians and pro business groups.
Some people working overtime could claim for additional holiday pay thanks to the decision taken by the tribunal, whose ruling implied UK companies may have been interpreting the EU Working Time Directive wrongly.
Currently only basic pay counts when calculating holiday pay but now workers can backdate claims, but only from a limited period which was a concern of government and businesses.
Lawyers have said it is not clear if the ruling applies to workers undertaking voluntary overtime.
Government figures say that of the 30.8 million workers in the UK about 5 million of those will be entitled to more holiday pay.
Conservative MEP and employment spokesman in the European Parliament Anthea McIntyre said the ruling “demonstrated the damaging effects of the EU’s Working Time Directive.”
“This may seem like good news for workers, but in fact it is bad news for the whole country If the ruling stands it will add to the cost of the goods and services we all need every day.
She added, “It will make our businesses less competitive globally and ultimately that will damage the economy and cost jobs. When you burden business this way with extra cost it is not consequence free.”
And Professor Len Shackleton, fellow at the Institute of Economic Affairs and labour market expert said:
“This decision has the potential to cost employers huge amounts in retrospective claims. This in turn will threaten firms’ ability to create jobs in the future.
“The ruling illustrates the difficulties employers always face in interpreting badly-drafted employment laws. In this case the initiative came from the European Union’s 2003 Working [Time] Directive which required paid holidays, but the Labour government of the time was also responsible for drafting unambiguous UK transposing legislation – and failed to do so.”
Speaking to the BBC, employer Lance Harris from Bristol summed up the opinion of many employers, particularly those running small businesses.
“Much more of this and I may well bring my retirement planes forward, to the detriment of all staff!” he said.
And Jean Lovett at law firm Linklates said, “Due to the costs involved, many employers may now look to reduce the availability of overtime, where feasible.”