Scotland business

Holiday pay ruling 'risk' to small firms in Scotland

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Up to 30,000 small firms in Scotland could be hurt by an Employment Appeal Tribunal ruling on holiday pay, according to a business lobby group.

The tribunal ruled that all people working overtime could claim for additional holiday pay.

Currently, only basic pay counts when calculating holiday pay.

The Federation of Small Businesses (FSB) claimed the decision presented "a real risk of closures and job losses" in Scotland.

But the Scottish Trades Union Congress (STUC) said the judgment addressed "a long-standing wrong carried out by employers".

The tribunal also ruled that workers can make backdated claims for a particular three-month period.

However, the ruling could be referred to the Court of Appeal, meaning a final decision may be years away.

'Potential to hurt'

FSB Scottish policy convener Andy Willox said: "Today's ruling leaves questions unanswered for smalls firms across the length and breadth of Scotland.

"It has 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.

"The FSB has been appointed to a UK government taskforce to examine this issue and will be fighting hard for small businesses to be insulated from the uncertainty and legal risks this ruling brings."

Voluntary overtime

A recent survey of FSB members nationwide found that nearly a third of small businesses with employees paid voluntary overtime.

Just over one in 10 small firms with staff also offered some form of commission.

The appeal tribunal ruled on three cases - Bear Scotland versus Fulton, Amec vs Law and Hertel vs Wood - where employees had won their original claims against their employers.

Business groups across the UK had argued strongly that overtime should not be included in holiday pay calculations.

The Scottish Trades Union Congress welcomed the ruling.

Assistant secretary Ian Tasker said: "This ruling is quite clear, and the judge is quite clear, on what he sees as normal working time, and that includes voluntary overtime.

"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."

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