Mid-sized manufacturers across Britain could be facing a £2.5m backdated holiday pay as far back as 1998, which threatens to put a great deal of firms out of business.

Following a ruling by the European Court of Justice, the CBI warned employers that they may be forced to pay commission-based workers additional retrospective holiday pay.

Today manufacturers organisation EEF also warns employers that the average £30m turnover manufacturer could be handed a £2.5m backpay in addition to an extra £250,000 in employer NICs.

These costs could also add 4 per cent to the average company’s payroll bill in the future.

Tim Thomas, head of employment policy at EEF, commented:

“This is potentially catastrophic for companies who have been fully compliant with UK law, yet now find themselves in a position which they could not have foreseen.

“This is a ticking timebomb for many companies, and is a serious threat to economic recovery as funds earmarked for critical investment are diverted to pay compensation. I fear in some cases this will see some businesses going bust.

“We urgently need Government to recognise the potential threat this poses and to bring forward legislation limiting the backdated liability companies will face.”

Source: Real Business

Image source: The Guardian