Holiday pay tribunal decision suggests new tactic for employers

Employers can defeat claims for more than one year’s holiday pay from sick employees by making a payment covering their most recent leave year, a tribunal has ruled.

Holiday issues are among the most common problems that employers deal with, and the legal position on how holidays and sick leave interrelate is still uncertain.

Ever since the outcome of the Stringer case last year – where the House of Lords ruled that failure to pay holiday pay can be an unauthorised deduction from wages – employers have been faced with uncertainty.

Legal experts warned that one effect of the Stringer case was that an employee could bring a claim for payment in lieu of accrued holiday pay, going back over previous leave years, as a series of unauthorised deductions.

But in the case of Kahn v Martin McColl, the tribunal ruled that payment for a sick employee’s final holiday year entitlement meant an unauthorised deductions claim for previous leave years’ holiday pay was out of time.

John Read, employment law editor at XpertHR, said that although the decision was not binding on other tribunals or courts, it showed a tactic that may work for employers.

“The Working Time Regulations prevent employees from carrying over holiday to subsequent leave years, and this decision appears to be the first to consider whether or not an employer can break a chain of unauthorised deductions, and thereby defeat a claim for more than one year’s holiday pay, by paying the employee for the most recent leave year.”

For summaries of this and other recent employment tribunal decisions, along with the full case transcripts, see Tribunal Decisions on XpertHR.

Jeya XpertHR podcastPodcast: Holiday pay On XpertHR Weekly, Jeya Thiruchelvam and John Read discuss the employment tribunal decision in Khan v Martin McColl, which considered whether or not an unlawful deduction from wages claim for holiday pay covering more than one leave year can be defeated by the employer’s payment of the employee’s final holiday year entitlement.

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