A NEW ruling that could see holiday pay now including overtime for workers has been described as a “bombshell” that could have drastic repercussions for small Hampshire firms.

That’s the view of employment experts from law firm Blake Morgan who said the decision announced at an employment appeal tribunal will now create a “headache” for companies.

The ruling was made today (tues) and could lead to claims by hundreds of thousands of workers who do voluntary overtime.

But companies warned they face a multibillion-pound bill which could put some out of business.

The Employment Appeal Tribunal ruled on two cases relating to the UK's interpretation of the Working Time Directive, including one involving electricians, scaffolders and semi-skilled operatives who worked on a project at the West Burton power station site in Nottinghamshire.

Unite said they consistently worked overtime, but that was not included in holiday pay, meaning they received ''considerably less'' pay when on holiday compared to when they were working.

Unite executive director for legal, membership and affiliated services, Howard Beckett said: ''Up until now some workers who are required to do overtime have been penalised for taking the time off they are entitled to. This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order.

''Employers will now have to include overtime in calculating holiday pay, and those that don't should be under no illusion that Unite will fight to ensure that our members receive their full entitlement.

Tim Forer, a partner in the employment team at south coast law firm Blake Morgan, “This is a bombshell of a ruling that has severe implications for businesses who are now likely to have to set aside large sums of money to cater for underpaid holiday pay.

“The question now remains as to how far back claims by underpaid workers could go. If a worker is successful in establishing that there has been a series of deductions, some claims could go back as far as 1998, the date when the UK Working Regulations were introduced.

“The Government estimates that one sixth of the 30.8 million people in work get paid overtime. That means that around five million workers could be entitled to more holiday pay.

“This ruling does not necessarily mean that it is the end of the matter, as it could be further appealed in the Court of Appeal.

“However businesses in the south region now have a major headache – and some may simply not be able to afford these unexpected payments.”