EEF, the manufacturers’ organisation, has joined the CBI in urging Government to introduce legislation to restrict potential liability from backdated holiday pay claims.
The organisation is demanding Government recognise the potential threat to economic recovery by creating emergency legislation.
Concerns have developed following several European Court of Justice rulings that could lead to substantial levels of claims for vacation pay dating back to 1998.
Head of employment policy at EEF, Tim Thomas said: “This is potentially catastrophic for companies that have fully complied with UK law yet now find themselves in a position that they could not have foreseen.
“This is a ‘ticking time-bomb’ for many companies and a serious threat to economic recovery, as funds earmarked for critical investment are diverted to pay compensation.
“I fear this may cause some businesses to go bust. We urgently need the Government to recognise the potential threat that this poses and to bring forward legislation limiting the backdated liability that companies will face.”