Will Small Businesses be Damaged by the Holiday Pay Ruling?

In light of the recent holiday pay ruling which shook every tier of the corporate hierarchy, this week Axis for Business asks whether it could be damaging to small businesses across the UK.

The Holiday Pay Ruling is Concerning a Lot of People

As an independent energy and telecoms supplier, who strives to deliver the best deals available to small businesses throughout the UK, Axis for Business knows how important it is for SMEs to keep their expenses in check. Only through doing so, can they ensure they have to funds available to remain viable.

That is why the recent holiday pay ruling is concerning a lot of people in the small business community, who fear that it could impact their profit margins. These are fears that have now been compounded after experts recently spoke out on the ruling’s potential to damage SMEs across the country.

The Impact on UK SMEs

The ruling itself established a new right for employees. Now employers have to factor overtime and other pay supplements into an employee’s holiday pay.

This, along with the suggestion that the ruling is retroactive (payments can now be backdated) means that experts are now suggesting that it could cost British firms billions of pounds. According to SMEWeb, National Chairman of the Federation of Small Businesses, John Allan, even suggested that retroactive claims cold force some small companies to close down.

The Appointment of a Government Taskforce

Allan went on to talk about how the FSB will help to safeguard SMEs from the effects of the ruling, saying that "clearly it would be desperately unjust to expect 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.”

Allan went on to elaborate, saying that "the FSB has been appointed to a 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."

Diverting Funds Away

The fact that this taskforce is being appointed suggests that yes, the holiday pay ruling could impact small businesses throughout the UK. It has the potential to impose extra demands on their profit margins, that could divert funds away from ensuring said businesses remain successful.