A two-year cap has been introduced for all backdated holiday pay claims made by employees.
The cap, effective on all claims from 1 July 2015, comes as a result of the Deduction from Wages (Limitation) Regulations 2014, which came into force on 8 January 2015.
The regulations are designed to minimise the impact on businesses following recent Employment Appeal Tribunal judgments which ruled that regular overtime and commission should be included in holiday pay calculations.
Initially, there was concern amongst business leaders that claims could be backdated as long as 10 or 20 years.
But, the new limit means that the period that the claim cannot be extended beyond a two year period.
To support backdated holiday pay claims and minimise breaching new regulations, it is imperative for businesses to better document staff time and create an audit trail of attendance data about their workforce.
Without accurate attendance data, employers could expose themselves to an administration headache and potential breach.
Integrated workforce management solutions, such as Vanquish, provide the transparency managers require to calculate any claims and apply holiday pay rates with accuracy.
As a cloud based system, Vanquish provides managers with instant access to historical attendance information relevant to any requests so they can meet any backdated claims with minimal fuss.
Managers can simply login to a claimant’s record and run a customised search for a two-year period.
Calculating holiday pay
A special formula to support the new holiday pay ruling automatically takes into account payments for overtime, sick pay, maternity pay etc during the same period and calculates the exact cost of any past and future claims owed to claimants based on their actual earnings and relevant pay rates.
Automation of complex calculations frees up administration time and the need to trawl through reams of manual timesheets.
With employment legislation facing organisations constantly evolving, workforce management systems are playing an essential role in helping businesses meet their employment obligations.