Insights

Nighat Sahi

Published 9 October 2023
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Holiday Pay – Update

A recent Supreme Court decision has clarified a number of issues when it comes to holiday pay.

The facts

 In the case of Chief Constable of the Police Service of Northern Ireland & PSNI another (Appellants/Cross-Respondents) v Agnew & others (Respondents/Cross-Appellants) (Northern Ireland) [2023] UKSC 33, the Claimants were police officers and civilian staff working for the police in Northern Ireland. They brought claims for underpayment of holiday pay. They had been paid holiday pay based on their basic rate of pay rather than their ‘normal pay’ (which includes overtime).

The issues

Their claim was brought under the ‘unlawful deductions’ provisions of the Employment Rights (Northern Ireland) Order 1996. There are identical provisions in the Employment Rights Act 1996 covering Great Britain.

The main issues were:

  • Whether Police Officers, not being traditional workers, could also rely on those provisions.
  • How far back the Claimants could claim for.

The decision

The Supreme Court held that Police Officers are entitled to claim in respect of a series of deductions. The Court also held that the claims were not limited to the period of three-months leading up to the presentation of their claims to the Employment Tribunal and the Claimants were able to claim in respect of the underpayment of their holiday pay as far back as 1998. The common factor in the series of deductions was the fact that holiday pay had been calculated by reference to basic pay rather than normal pay.

The Court also held that a relevant series for the purposes of a claim of unlawful deductions is not necessarily broken by a gap of three-months between deductions. This effectively reversed the decision of the EAT in Bear Scotland v Fulton that held that deductions could only be linked in a series if there was a gap of three months or less between each deduction.

Finally, the case also provided some other helpful guidance. In particular, the Supreme Court made it clear the four weeks annual leave (EU leave) and the additional 1.6 weeks of leave (domestic leave) should be treated as one single unit of leave to which the worker is entitled. The court also held that when calculating the daily rate of normal pay, it should not be done by reference to the number of calendar days in a year.

Comment

This case clearly has potentially significant implications for some employers and their holiday pay although claims for unlawful deductions from wages under the Employment Rights Act 1996 can only be made in respect of deductions over a maximum period of two years.

However, whether a claim in respect of two or more deductions constitutes a series of deductions is still a question of fact and consideration will still need to be given to the full surrounding circumstances.

Whether you’re an employer, or an employee, if you think you may have been affected by this decision, then please get in touch with Nighat.

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