SOME 10,000 Scots workers are estimated to have claims for backdated holiday pay with added overtime after a groundbreaking legal ruling that is expected to cost industry millions of pounds.
Up to 30,000 small firms in Scotland could be affected as they have to adjust their payroll to accommodate the landmark employment appeal tribunal ruling and provide back pay.
The key that unlocked the potential claims was initially a European Court of Justice ruling that said workers should receive regular overtime, commission and bonus payments during paid leave. Currently only basic pay counts when calculating holiday pay.
The tribunal ruled on two cases relating to the UK's interpretation of the Working Time Directive - one involving electricians, scaffolders and semi-skilled operatives who worked on a project at the West Burton power station site in Nottinghamshire for Amec and Hertel, and one involving road maintenance firm Bear Scotland.
Employment Judge Mary Kearns, sitting in Glasgow, found Bear Scotland had made unauthorised deductions from the wages of two employees, David Fulton and Douglas Baxter, by failing to include overtime and other payments associated with their work in calculating the holiday pay due to them.
The Government has set up a task force to assess the impact of the ruling while unions welcome the decision on test cases.
The Unite union said the ruling secured justice for workers who had been "short-changed" by not having overtime count towards holiday pay, although it insisted it did not open the flood gates because claims would be limited.
Howard Beckett, Unite executive director for legal services, said: "Up until now, some workers who are required to do overtime have been penalised for taking the time off they are entitled to. This ruling not only secures justice for our members who were short-changed, but means employers have got to get their house in order."
A spokesman for Thompsons Solicitors, which has been working with Unite, estimated there would be 10,000 Scottish claims.
Andy Willox, Scottish policy convenor for the Federation of Small Businesses (FSB), said the decision had the potential to hurt thousands of Scottish businesses, presenting a "real risk of closures and job losses" if they face large retrospective claims.
"Clearly it would be desperately unjust to expect Scottish businesses to pay retrospective compensation for how they calculated holiday pay when they were fully compliant with the law as it was understood at the time," he said.
A recent survey of FSB members found that one-third of small businesses with employees (31 per cent) paid voluntary overtime. One in 10 (11 per cent) of small firms with staff also offered some form of commission. This means the ruling could have an impact on as many as 30,000 Scottish small businesses.
The Scottish Trades Union Congress said the judgment addressed "a long-standing wrong carried out by employers".
Assistant secretary Ian Tasker said: "What we are concerned about is that we continue to see organisations like the Federation of Small Businesses say they have increasing burdens of regulation, but the trade unions have seen the effects of cuts in regulations to protect workers, including enforcement on issues such as the national minimum wage.
"We don't see employers' organisations complaining about that."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article