Important judgment on historic holiday pay claims – will it affect your business?

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The Supreme Court has this week handed down an important decision in long running litigation concerning holiday pay for police officers in Northern Ireland.

In this case, Chief Constable of the Police Service of Northern Ireland (PSNI) v Agnew, the Supreme Court considered claims by over 3000 police officers concerning underpayments in holiday.

The police officers had been paid holiday by reference to their basic salary only.  As they received regular overtime payments and other allowances, the PSNI accepted that this formed part of their normal pay and should have been taken into account for the purposes of calculating their holiday pay.

The dispute arose over how much holiday pay was due.  Claims for underpayments in holiday pay are brought as a claim for unlawful deductions from wages.  The general position is that the claim must be brought within 3 months of the deduction in question.  However, where there has been a series of deductions, the claim can be brought within 3 months of the final deduction in respect of all of the deductions in the series.

Previous case law in this area had suggested that a series of deductions would be broken where there was a gap of more than 3 months between deductions, taking into account the normal time limit to bring a claim for unlawful deductions.  The PSNI argued that the police officers could not claim holiday pay where there had been a gap of more than 3 months in the series of deductions, such as where more than 3 months had passed between the periods of holiday taken.

The Supreme Court disagreed with the PSNI and found that a gap of more than 3 months between holiday periods does not necessarily break a series of deductions.  The Court said that if the deductions can be factually linked, a gap of more than three months between the deductions will not break the series.

The implication of this decision is that employees and workers will potentially be able to claim back pay for longer timeframes, going back up to 2 years in Britain, even where there may have been significant gaps between the deductions.  The individual will simply need to demonstrate that the deductions are sufficiently similar to establish that they form part of a series.  The Court’s decision was influenced by the fact that employers may be able to structure payments to avoid employees and workers being able to establish a lengthy series of deductions.

Whilst this case concerns holiday pay, claims for unlawful deductions can cover almost all payments due to employees and workers and the impact of this decision is therefore far reaching.

If your business has employees who earn payments on a regular basis in addition to normal salary, you should take steps to ensure that you are calculating holiday pay correctly.  This is especially important now that the prospect of claims for historic holiday pay covering longer periods is increased.

If you have any concerns about holiday pay or any other employment law matters, please contact Taylor Walton’s employment law team here.

Disclaimer: General Information Provided Only
Please note that the contents of this article are intended solely for general information purposes and should not be considered as legal advice. We cannot be held responsible for any loss resulting from actions or inactions taken based on this article.


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