Businesses in the UK are facing an anxious wait to see if the law on holiday pay will be changed under their feet.

Imagine a speed limit being changed on a road, but the authorities telling motorists that the change actually occurred a few years ago, and now they are going back over the old speed camera footage to find new offenders.

That is what we are facing following a recent European Court of Justice (ECJ) ruling which redefined holiday pay to include more than basic pay.

What this means is, depending on the subsequent rulings from the UK courts, employers may have to change the way they calculate holiday pay.

That is an extra cost at a time when businesses are getting back on their feet – but it is the retrospective change which is really the problem.

Businesses could face retrospective claims relating to earlier periods of annual leave. These claims could go back six years or possibly even as far back as 1998.

The impact of this would be massive. It could mean billions of pounds would have to be paid back and would be a threat to the existence of some firms.

If liabilities on holiday pay are backdated, individual firms may face bills of tens of millions of pounds.

Some medium-sized businesses have told the CBI that backdated claims could push their otherwise profitable businesses into insolvency.

Moving the legal goalposts in this way is unacceptable.

Firms that have done the right thing and fully complied with UK law now face the threat of substantial additional costs.

And the companies most at risk are in vital sectors for our economy, such as manufacturing, construction and civil engineering.

Although most businesses believe we are better off in a reformed EU, there is a real danger of expansive decisions like this being made by the ECJ about the UK labour market.

As part of an EU reform programme, this has to be addressed. It’s time to put a stop to back-door employment law being made.

We need the UK Government to take a strong stand and do all it can to remove this threat.

Otherwise we face the very real prospect of successful firms in this country going out of business, with the jobs they provide going too.

With such hugely significant long-term effects, the UK must resist these judgments, which go far beyond what could have been foreseen when the working time rules were introduced.

They do not respect the EU treaty, which says pay is a matter for Westminster, not Brussels.

Further cases on commission and overtime are also proceeding, meaning major uncertainty for businesses.

If the Government doesn’t step up its engagement to defend UK law, we will have to face up to the reality that some of our successful small and medium-sized firms could be going out of business.