The Supreme Court has now ruled in the long-awaited holiday pay case of Agnew v Chief Constable of the Police Service of Northern Ireland and anor that workers can claim for any historic unpaid holiday pay they are owed even when there is a gap of more than three months between the periods of holiday leave taken.
Basic facts
The case was brought by more than 3,000 police officers and 364 civilian staff who claimed that they had been underpaid statutory holiday pay since 23 November 1998 when the Working Time Regulations (Northern Ireland) 1998 (WTR) came into force.
As the force had already accepted that they had been underpaid, the question for the court was how far back they could claim for those losses. To succeed, the workers had to show that historic underpayments of holiday pay could amount to a series of unlawful deductions under the Employment Rights (Northern Ireland) Order (ERO) 1996.
Relevant law
In Northern Ireland (NI), a claim for underpaid holiday pay can be lodged under the WTR (NI) 1998 and as an unlawful deduction from wages under the ERO 1996. However, under the WTR, a claim for holiday pay must be brought within three months less one day of the date holiday pay was underpaid meaning that the payment can only be backdated for three months.
Under the ERO, on the other hand, a claim for an unlawful deduction from wages can be brought within three months less one day of the underpayment or, where there are a “series” of underpayments, within three months less one day of the last of them.
Although “series” is not defined in the legislation, previous case law has determined that where there is a gap of more than three months between the underpayments, this breaks the chain in the series of deductions. As a result, earlier periods of underpayments, namely those relating to the period before the three-month gap, cannot be claimed.
Supreme Court decision
The Supreme Court held that this approach was wrong. In doing so, it considered that the purpose of the “series” extension was to provide protection for vulnerable workers who are not only paid less than their entitlement, but who are also subject to repeated deductions.
In order to give effect to that purpose, the Supreme Court held that a strict three-month time limit must be approached in the same way as complaints for a detriment (disadvantage) on trade union grounds. These claims must be lodged within three months beginning with the “action” complained of or, where the action was part of a series of similar actions, the last of those actions. In those cases, the courts have recognised that a strict three-month time limit for making a complaint in respect of each of the acts would impose a wholly unreasonable burden on a worker if the acts formed part of a series which were connected. Consequently, in a case of trade union detriment, acts are treated as connected if an employer has adopted a practice which has the effect of subjecting a worker to ongoing or repeated detriment.
Applying that approach to a claim for a series of underpaid holiday payments, the Supreme Court upheld the Court of Appeal’s findings (ELR 634) that:
- Each unlawful deduction relating to holiday pay was factually linked where it was calculated by reference to basic pay rather than normal pay.
- That method of calculation was applied to all payments of holiday pay.
- The fact that there was a gap of three months between the payments did not, as a matter of law, break the series of underpayments or bring them to an end.
- The chain in the series was not broken by the fact that workers were paid when they were in work for periods between holidays.
Comment
The outcome of the Supreme Court’s decision has significant implications for workers who have been underpaid holiday pay going back over a period of months or years as they should now be able to claim more back pay than otherwise would have been the case.
Although these claims were brought under the Northern Ireland legislation, the same provisions are mirrored in the WTR 1998 and the ERA 1996, so the judgment applies equally to workers in Great Britain.
However, while workers in Northern Ireland have no limit on the amount of back pay that they can claim where they can establish that they have been subject to a series of underpayments relating to holiday pay, workers in Great Britain are still limited to claiming back two years under the ERA 1996.