Are Fears Over Holiday Pay Ruling Exaggerated?

A lot of assumptions have swirled around the Employment Appeal Tribunal's ruling on whether to allow overtime into the calculations for holiday pay rates.

There have been claims that it would cost businesses billions in backdated reimbursement pay-outs, it would see small and medium-sized businesses fold under the financial pressure, and millions of workers would suddenly be in the money.

None of this is true, but the ruling will change the relationship between employers and their staff regardless.

Even though this issue will likely spend at least a year or two stuck in the courts before any money changes hands, the Confederation of British Industry says businesses should start preparing now.

John Lewis, a company always ahead of the game, reviewed its policies in the summer and has already set aside £40m to compensate its workers.

Video: Is Ruling Good For Britain?

Smaller businesses won't face such a big bill, but may find themselves owing some workers thousands of pounds.

The Government sided with employers in the debate, fearful the impact that Tuesday's ruling would have on British firms struggling to emerge from the recession. It is yet to exercise its right to appeal the decision.

Business Secretary Vince Cable has stalled for time by setting up a taskforce to ponder the ruling, and is waiting for employers themselves to launch the first appeals.

Failing that, the Government could enact emergency legislation to help businesses pay their employees over a more affordable time period.

Workers shouldn't get their hopes up for a windfall. Those who regularly work overtime, but have holiday pay based on basic salary rates, should get in touch with their unions to learn about their options.

The ruling hasn't backdated the payouts to 1998, but rather imposed a clause of three-month periods between holidays. If you've taken longer between holidays, that's the time your backdated claims stop.

In the next few months, a similar tribunal will rule on how much commission can be counted into holiday pay rates.

If that decision is also in favour of the workers, then we'll really mark a shift in the way they're treated when it comes to taking time off.