The landmark judgment, Chief Constable of the Police Service of Northern Ireland v Agnew [2023] UKSC 33, means thousands of police staff in Northern Ireland can claim up to 35 years' worth of miscalculated holiday pay.
The claimants, police officers and civilian staff, brought claims for miscalculated holiday pay dating back to 1998. The dispute concerned whether a statutory provision applied, time-barring claims for underpayments going back further than three months and, if it didn’t apply, the underpayments were part of a ‘series’ within the meaning of the provision.
Andy Williams, partner, Stevens & Bolton, said: ‘‘Until [this judgment], the position in England, Wales and Scotland had been governed by the Employment Appeal Tribunal’s (EAT) 2013 finding in the case of Bear Scotland [Bear Scotland Ltd v Fulton [2015] ICR 221 (EAT)], that a gap of more than three months in a series of underpayments was sufficient to extinguish the right to bring claims in respect of any earlier underpayments.
‘Likewise, the EAT inferred that making a payment for holiday at the correct rate of pay could also break a series of deductions. The EAT’s finding in Bear Scotland has come under criticism and [this] judgment will come as no surprise to many.
‘The Supreme Court’s judgment will be of grave concern to many employers, as it greatly increases the potential cost of historic holiday pay claims. The Police Service of Northern Ireland (PSNI) has calculated that, in light of this judgment, the cost of their historic holiday pay claims will increase 100-fold, from £300,000 to £30m.
‘Employers in Great Britain (ie those in England, Wales and Scotland) may still, however, take comfort from the two year limit on historic holiday pay claims [under the Deduction from Wages (Limitation) Regulations 2014].’
Michael Powner, partner at Charles Russell Speechlys, said: ‘In upholding the decision, they have confirmed that in a “series” of unlawful deductions from wages claim for holiday pay (a “series” being where there have been consistent underpayments when holiday was taken), a gap of more than three months between deductions does not break the series, allowing more back payments to be recovered.
‘This overturns the position in Great Britain and extends backpay liability for under/unpaid holiday. While this significantly increases the potential cost of historical pay claims in Northern, the impact in Great Britain is slightly less as backpay is already limited to two years, whereas there is no equivalent ”back stop” provision in Northern Ireland.’
Colin Godfrey, employment lawyer at Taylor Wessing, said: ‘This means that gaps of more than three months will no longer prevent individuals bringing claims for a series of underpaid holidays.
‘It will still be necessary to establish that there has been a “series” of deductions (which will depend on whether they are sufficiently similar) but this decision potentially opens the way for significant claims for underpayments over a two-year period. It underscores the importance of getting the calculation of holiday pay right, including understanding what constituent elements of “pay” need to be included in the calculation.’
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