A steep escalation in holiday pay disputes has hit the Employment Tribunal, with new figures showing an almost nine-fold rise in cases after changes to the Working Time Regulations transformed how entitlement is calculated.
The surge in claims reflects a growing willingness among staff to challenge underpayments and a clearer understanding of what they are owed.
The data comes from the Ministry of Justice in response to a freedom of information request from commercial law firm Hill Dickinson. The figures reveal 2,392 complaints relating to holiday pay in the year to March 2025, compared with 241 in the previous year.
More than 1,600 of the recent cases remain open, compared with 186 a year earlier, suggesting a mounting backlog.
Rule changes prompt greater confidence
The rule changes, introduced on 1 January 2024, reshaped how holiday pay must be calculated for employees on regular hours, irregular hours and seasonal patterns. They also clarified how a worker’s “normal” rate of pay should be determined, covering regular components such as overtime and commission.
The intention was to simplify entitlement, but the clearer framework appears to have given workers greater confidence to challenge errors.
Glenn Hayes, employment partner at Hill Dickinson, said there had also been a number of high-profile cases in which large sums were awarded, making claims more attractive to employees. “As more people become aware of it and the consequences for breach bring greater liabilities as a result of the case law, we’re only likely to see this increase further.”
Historic entitlements under scrutiny
Since 2009, all UK workers have been entitled to 5.6 weeks of paid annual leave, split between four weeks paid at the “normal” rate and 1.6 weeks paid at the basic rate. The distinctions remain, but the reforms have widened clarity over what counts as normal pay. This has helped employees identify whether previous calculations were incorrect.
A tribunal decision in February may further increase the number of claims. The ruling found that the two-year limitation period for holiday pay disputes, introduced in 2014, was unlawful. Observers say it could open the door to retrospective claims going back far beyond the current limit.
Tribunal system under strain
The rise in activity has intensified pressure on the already stretched employment tribunal system. The Ministry of Justice acknowledged the challenge and said steps were being taken to expand capacity. “This government inherited a justice system in crisis and a soaring Employment Tribunals backlog,” a spokesperson said. “We have funded the Employment Tribunal to sit at maximum capacity and we’re investing in the recruitment of up to 1,000 judges and tribunal members this year.”
The rapid rise in claims suggests an urgent need to review holiday pay calculations, particularly where staff receive variable pay such as overtime or commission. With a clearer legal framework in place and recent rulings opening the door to longer-term claims, organisations that fail to act could face growing financial and reputational risk.
