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Latest Update on Holiday Pay Claims.


Latest Update on Holiday Pay Claims.

The Northern Ireland Court of Appeal’s decision in Chief Constable of the Police Service of Northern Ireland and another v Agnew has recently been published. As we have reported in recent times, there have been a number of cases considering what deductions ought to be counted as a ‘series’ for the purposes of employees being able to claim holiday pay. Whilst it was thought that the case of Fulton and Others v Bear Scotland had settled the matter, arguably this new case casts fresh doubt on the issue of holiday pay time limits for the purposes of making claims, and may lead to fresh developments in the saga.

What was the Decision?

In contrast to the previously decided cases on the issue, the Northern Ireland Court of Appeal decided that the use of a three month gap for the purposes of deciding whether non-payments or under-payments of holiday pay could be claimed back leads to “arbitrary and unfair results”. Given that the three month criterion is not to be relied on, what constitutes a ‘series’ of payments is a factual question to be decided in each individual case. In this case for example, the fact linking the ‘series’ of unlawful deductions was that basic pay had been paid as holiday pay. This was without taking in to account overtime and other allowances in order to sustain what would amount to the employee’s normal pay required during their four week statutory period of leave under European Union law.

Before employers become too fearful about the potential financial consequences of this decision, there are a number of caveats to be borne in mind. The decision comes from the Court of Appeal in Northern Ireland and strictly speaking need only be applied in Northern Ireland. However, this is not to say that the same argument could not be advanced in front of other employment tribunals in the rest of the United Kingdom, where the Agnew decision would certainly be persuasive, if not binding.   Secondly, there is always the possibility that the decision could be appealed to the UK Supreme Court.

What are the Likely Consequences for Employers?

Arguably whilst the decision in Agnew does not fundamentally change the law in Scotland, it introduces an unwanted element of uncertainty in relation to time limits for employers going forward. Certainly one part of that will relate to costs: in Agnew, the claim related to alleged deductions  going as far back as 1998, with the estimated costs of the backdated claims being as much as £30 million, without the 3 month gap. However, ultimately whether this case will have any effect outside Northern Ireland remains to be seen.

For more information on the ruling or how it may impact on you please contact a member of our Employment Law team

Posted by Chris Phillips

Partner

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