Unions target catering sector for holiday pay claims

Employers in the catering sector could face a wave of legal action as unions target the industry and mobilise over holiday pay, an employment lawyer has warned.

Worryingly, before law changes come into force in July, holiday pay claims can be backdated to 1998.

Esther Smith, a partner in the employment team at TLT Solicitors, warned delegates at The Caterer's HR Forum yesterday of "a massive increase in union activity and class actions" within the sector.

She said that while the introduction of fees for the employment tribunal process had cut claims by 80%, those that remained were "kitchen sink" claims. Such claims, she said, "have everything in them and can get very complicated, very problematic and very emotional. So while you do not have the quantity, those claims you do get could be twice as bad as they ever were before".

While unions have not traditionally had much footprint within hospitality, Smith said that the catering sector was being targeted.

"We are seeing a massive increase in union activity and class actions being brought," warned Smith.

One of the "nastiest" recent cases Smith has experienced was for a client providing services into the further education environment where a union has been "aggressively" courting membership.

"They have been very active within this supplier's workforce and are causing untold claims for individual employees who are alleging they are being treated less favourably because they are union members," said Smith. "It really does seem to be a sector at the moment that is being targeted."

Including overtime within holiday pay calculations could be a focal point for disputes, said Smith, particularly over the next three months. "Unions are really picking up and running with the issue," she warned.

In July, new laws come into force limiting backdated claims to two years. However, claims lodged before then can go back to whenever the employee was entitled to holiday pay under the Working Time Regulations 1998. "That could be a very expensive claim," Smith noted.

Precedent has been set for employers within the Neal case, and more recently, the Lock case. The result is that overtime and commission must be calculated into holiday pay, and the reference period prior to the holiday is 12 weeks.

"The principles rehearsed in [cases such as Neal versus Freightliner Ltd] would apply equally as a matter of law to voluntary overtime," said Smith.

"So even when you have people doing very ad hoc, entirely voluntary overtime every now and then, in theory, that should be calculated as part of their holiday pay."

As a result, Smith said employers faced "a real dichotomy" over whether to take a proactive approach to changing pay structures, "or whether to sit tight and see whether their employees bring claims".

While the administrative burden of restructuring holiday pay to take overtime into account was "very complicated", Smith said those with a unionised workforce, "are at a much greater risk of claims. It is one of the issues that the unions are really picking up and running with".