As a result of the perceived influx of holiday pay claims
in the wake of the Bear Scotland non-guaranteed overtime EAT decision, the Government introduced the Deduction from Wages (Limitation) Regulations 2014. These Regulations will restrict an employer’s back pay liability in holiday pay and overtime claims made from July 2015 onward. However, the Regulations have a much wider scope than just claims regarding overtime.
The Deduction from Wages (Limitation) Regulations 2014 came into effect on 8th
January 2015, but only apply in relation to unlawful deductions claims made on or after 1st
July 2015. It has no effect for claims made before this date so existing claims have no statutory limit placed on them.
They have the effect that, for any unlawful deduction claim made on or after 1st
July 2015, the claimant can only claim in relation to deductions made in the 2 years prior to the date the ET claim was made.
This will apply regardless of the fact that the claimant is able to establish a chain of deductions spanning longer than the 2 year period. Any deductions which occurred prior to the 2 years period will be disregarded and the employee will not be able to receive recompense for those.
This means that employers no longer face the threat of employees claiming in relation to holiday pay deductions going back years on end if they were able to establish a chain.
For further clarification please contact the Peninsula Advice Service on 0844 892 2772.