Thousands of workers across the region could be missing out on millions of pounds in backdated holiday pay and overtime.
A new European ruling is set to benefit workers who get extra in their pay packet for overtime, shift payments, bonuses and commission, but only receive basic pay when they take holidays.
Thanks to the ruling they may now be entitled to claim back any potential underpayment – and the ruling covers past, as well as current employers.
Paul Miller of Sweeney Miller solicitors in Sunderland said: “If you have worked paid overtime, received shift allowance (including nightshift) or earned commission or bonuses, you need to be aware of the recent law changes on holiday pay.
It not only affects workers in their current job but any previous job held over the last six years.
Holiday pay in the UK is usually calculated on the basis of your basic salary. But a European Court of Justice Judgment held that this way of calculating holiday pay is wrong and found that the calculation of holiday pay should make an allowance for additional payments made.
This ruling is one of the biggest developments in employment law since the judgment in favour of low-paid cleaners, which led to equal pay and mass compensation.
When the holiday pay judgment was first made public, most observers believed it would only apply to sales people who rely on commission, but further cases have applied to anyone who gets extra pay for working regular overtime and bonuses too.
The ruling relates to how Britain interpreted the EU’s Working Time Directive and brings the UK into line with the rest of Europe.
In Europe, firms have been working on the principle of combining all irregular earnings such as commission or shift work to get an average weekly figure when calculating holiday pay, while UK companies used a simplified calculation based on basic pay.
This calculation was fine for fixed salaries but did not correctly take into account workers on a basic salary plus commission or bonuses.
Workers who think they may have been underpaid are advised to contact a Solicitor as soon as possible to assess their case.