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Update Regarding Holiday Pay 

Posted on 12th October 2023 in Employment

Posted by

Stephen Jennings

Partner and Solicitor
Update Regarding Holiday Pay 

Can employees claim historic underpayments of holiday pay from their employers even if there are gaps of more than three months between deductions?

The recent long-awaited Judgment in Chief Constable of Police Service of Northern Ireland v Agnew has been handed down by the Supreme Court. The judgment clarified an important point on the correct calculation of holiday pay.

The Claimants worked in Northern Ireland as police officers and civilian police service staff. They claimed unlawful deduction of wages after they were underpaid holiday pay. The employers admitted that they had done so.

Whilst claims must generally be brought within three months of a deduction, earlier deductions can be claimed within the same proceedings if they form part of a series of deductions. However in an earlier case, Bear v Scotland v Fulton, the EAT (Employment Appeal Tribunal) had previously concluded that a gap of three months or more between deductions broke the chain, so Claimants could not claim for unauthorised deductions beyond this point.

The Supreme Court has now reversed this. It considered that in cases where there is a gap of more than three-months because of the employer’s failure to properly meet their obligation the imposition of a strict three-month rule would produce unfair results.

The Supreme Court also clarified what was meant by a series of deductions. Whether a claim in respect of two or more deductions constitutes a series is essentially a question of fact. When deciding the outcome certain circumstances should be considered: the deduction in issue, their similarities and differences, size and impact; what links the deductions together and all other relevant circumstances.

How we can help

This case serves as a useful reminder for employers to ensure they are correctly calculating holiday pay, especially in light of other recent decisions such as the Harpur case. This is a complex area of law; if you need help establishing your holiday pay obligations, our team of specialist employment lawyers would be happy to help.

If you have any queries around the incoming legislation and what steps will be required, please get in touch with our employment team.  

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