Key Facts

This case resolves around the thorny issue of claims for passed holiday pay.

An employee was employed as a waiter and brought a claim against his employer for holiday pay which he alleged was outstanding. Under the Working Time Regulations, holiday pay claims can only be brought within the present holiday year. Claims must also be within the time limit of the Working Time Regulations. The Claimant therefore instead brought the claim as an unlawful deduction from wages under Part 2 of the Employment Rights Act 1996. The argument from Claimants is that if they can show the most recent deductions is part of a series of deductions, then the 3 month time limit for bringing such a claim runs from the last in the series of deductions and the claim can therefore cover breaches for many months and years. 

This issue has previously arisen and is familiar to many of MILS clients in the case of Inland Revenue v Ainsworth in 2005. This was a Court of Appeal case which said that claims for outstanding holiday pay arising from the Working Time Regulations must be brought under those Regulations and not under the Employment Rights Act.

Comment

This is a step backwards for employers who had previously thought that the Court of Appeal decision meant that claims for past accrued untaken holiday pay could not  be brought under the Employment Rights Act. However the practical result is that Claimants are more likely to bring claims for passed untaken holiday pay and lodge the claim with a Tribunal which will then automatically be re-stayed pending the House of Lords decision on Ainsworth. The previous Tribunal decisions had been along the lines that the Court of Appeal decision was by an authority and therefore the claims under the Employment Rights Act could not be brought. The significance is that claims under the Employment Rights Act potentially give employees an opportunity to claim for many years back holiday pay, rather than a more restricted claim brought under the Working Time Regulations.

NB: At the time of going to press the European Court has now given Judgment. In the next update we will examine the ramifications for the above issue in full.