October 11, 2023

Supreme Court decision widens the scope of holiday pay claims

Posted in Employment, Employment

A newly released judgment from the Supreme Court widens the scope of holiday pay claims for workers and employees. Up until this decision the time limit for employees or workers to bring claims for underpayment of holiday spanning a number of periods was limited to the gaps between holidays (or any period when underpayment was claimed) being no more than three months apart. In other words, the series of deductions all had to have taken place within 3 months of each other for these claims to be valid.

The case of Chief Constable of the Police Service of Northern Ireland v Agnew emanates from Northern Ireland. The Northern Ireland Court of Appeal had previously held that there did not need to be a break of no more than 3 months between periods of deductions for the claims to be valid. This contrasted with the EAT decision in Bear Scotland v Fulton which held that, for claims in a series of deductions to be brought, there had to be no more than 3 months between each period. The Chief Constable case was not binding on the UK courts because it was in Northern Ireland. However, the case went on appeal to Supreme Court which has agreed with the Northern Ireland Court of Appeal.

Just under 4000 police officers and civilian employees brought claims that their pay whilst they were on holiday was only calculated by reference to basic pay and did not include other pay such as regularly worked overtime. While the respondents admitted this, they argued that claims for underpaid holiday which had a break of more than 3 months between holidays broke the chain of a series of deductions.

However, the Northern Ireland Court of Appeal disagreed and held a series of deductions could be evidenced if they occurred with sufficient repetition, even if the intervals of time were different and the amounts themselves were different. The Supreme Court has accepted this argument; and in doing so, has opened the door for a considerably increased number of unlawful deductions claims for underpayment of holiday because claimants will no longer be constrained by the limit of three months to evidence a series of deductions. The Supreme Court argued that what constitutes a series of deductions will be a question of fact in the individual circumstances but that the purpose of the  provisions is to protect workers and employees from being paid too little for the work they do, and especially to protect those who are vulnerable.

So employees and workers will no longer need to worry about a gap of more than 3 months between periods of holiday defeating their claims for underpayment of holiday pay. While this is bad news for employers, who may now face increased holiday pay claims, there is at least the small comfort that the employees and workers can only go back a maximum of 2 years to claim underpaid holiday, and no further, so unforeseen liabilities will be limited.

If any employers or employees have any queries on this judgment and its implications, or queries on holiday pay, please contact Gemma Ospedale in the London employment team of RWK Goodman. We have a team of people who will be happy to help with any enquiries.

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