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Prof Len Shackleton, IEA Fellow and labour market expert, commented on the Employment Appeal Tribunal's decision that holiday pay should be defined to include regular overtime.
 
"This decision has the potential to cost employers huge amounts in retrospective claims. This in turn will threaten firms' ability to create jobs in the future.
 
"The ruling illustrates the difficulties employers always face in interpreting badly-drafted employment laws. In this case the initiative came from the European Union's Working Directive which required paid holidays, but the Labour government of the time was also responsible for drafting unambiguous UK transposing legislation - and failed to do so.
 
"This verdict will be appealed, but the government should also urgently examine whether it is possible to prevent significant past claims by making this ruling applicable only from the date of the decision. In the future we ought to search much harder to find ways to deregulate the labour market whether we are in or out of the EU."
 
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Notes to the editor:

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
 

The IEA is a registered educational charity and independent of all political parties.