Holiday Pay: Breaking the chain
In the latest case to offer guidance on how to calculate holiday pay (and the possible liability for failure to do so in the past), the Court of Appeal in Northern Ireland (NICA) has held that – in Northern Ireland at least – a gap of more than three months in a ‘series’ of deductions is not sufficient to break that series, and that it is potentially open for claimants to assert their historical rights by looking back beyond a previous gap exceeding three months.
By contrast, tribunals in Great Britain are (and continue to be) bound by the EAT’s judgment in Bear Scotland Ltd, in which a gap of more than three months in a ‘series’ of deductions is sufficient to break that series, preventing a claimant from looking back beyond this point.
In Chief Constable of Northern Ireland Police v Agnew, NICA considered the application of the relevant law in Northern Ireland, being the Employment Rights (Northern Ireland) Order 1996 (ERO). The judge agreed with the claimants’ arguments that, on a strict reading of the ERO, if there was a “sufficient similarity of subject matter, such that each event is factually linked with the next…in the alleged series…” that would be enough to amount to a series.
Comment: The case of Agnew is not formally binding on tribunals in Great Britain, as described above. It may, however, provide strong persuasive authority on any future appeal which seeks to challenge the decision of the EAT in the Bear Scotland case (not least as the wording of the ERO and the Employment Rights Act 1996 is the same on this particular point of law). Employers may continue to draw some comfort from the Deduction from Wages (Limitation) Regulations 2014, which imposed a cap of two years on retrospective unlawful deduction from wages claims, (which includes claims for holiday pay).