Unite, the trade union that backed the majority of the claimants in Bear Scotland v Fulton regarding the calculation of holiday pay, has announced it will not appeal the Employment Appeal Tribunal decision. To read our alert on the decision, please click here.

What Has Happened?

One effect of the EAT’s judgment was to dramatically limit workers’ rights to bring Employment Tribunal claims for historic underpayments of holiday pay. It had been widely expected that Unite would lead an appeal to the Court of Appeal, so the union’s announcement that it won’t will be music to the ears of employers who are concerned about the potentially significant cost of such claims.

The bad news is that Unite’s decision not to appeal is not necessarily the end of the issue. Many cases were stayed pending a decision in Bear Scotland, and it is likely that these cases will now proceed and a new test case may well work its way up to the Court of Appeal.

What Does This Mean For Employers?

The EAT’s judgment is highly unlikely to be overturned within the next 12 months. In the meantime, employers can stand firm on requests made or claims brought for significant back pay that are outside outside the parameters set by the EAT.

By way of reminder, the EAT decided that a Tribunal can only deal with a claim for an unlawful deductions from wages if it is brought within three months of: i) the date of underpayment; or ii) if there has been a series of deductions, within three months of the last deduction in the series (unless the Tribunal decides that the deadline should be extended because it wasn’t reasonably practicable for the claim to have been brought in time).

As it is only the four weeks (20 days for a full-time worker) mandatory holiday required to be given to workers by the European Working Time Directive that must include overtime, etc., an underpayment claim relating to more than one period of holiday may only be considered by a Tribunal if periods of mandatory holiday have been taken within three months of each other. The EAT said that it made sense for mandatory holiday to be treated as having been taken first in the holiday year. This means that any additional holiday taken towards the end of the year will tend to break up the periods of mandatory holiday and so disrupt a workers’ ability to claim for them.