Holiday pay claims: NI Court of Appeal finds that a three-month gap should not break a series of deductions
In Chief Constable of Police Service of Northern Ireland and anor v Agnew, a group of employees of the Police Service of Northern Ireland (PNSI) brought claims for unpaid holiday pay under the Northern Irish equivalent of the Working Time Regulations. Their claims were based on the failure of the PNSI and the Northern Ireland Policing Board to calculate the police officers’ holiday pay with reference to their normal remuneration, which included salary and overtime. Instead, holiday pay had been calculated with reference only to basic salary since 1998, when the working time legislation had been implemented.
The Claimants’ claims were upheld at first instance, and the respondents appealed. One of the issues considered by the Northern Ireland Court of Appeal was the correctness of the decision reached in Bear Scotland regarding the events which can break a “series of deductions”. The law in Great Britain and Northern Ireland allows claimants to claim for a “series of deductions” from wages (including underpaid holiday pay) so that historical underpayments can be captured as part of a claimant’s losses; this is subject to a maximum “lookback period” of two years in England & Wales. There is no maximum in Northern Ireland. The case of Bear Scotland further limited claimants’ ability to claim for a series of historical underpayments; it decided that a gap of three months or more in between underpayments would break a series (such that claimants could only claim an unbroken sequence of underpayments post-dating such a gap). The court in Bear Scotland also said that a lawful payment (i.e. a correct holiday payment) would have the same effect of breaking the series of underpayments.
The Northern Ireland Court of Appeal held that a three-month gap or lawful payment should not operate to break a series of deductions. Its reasoning was as follows:
- There was no definition in the relevant Northern Irish legislation (equivalent of the Employment Rights Act) of the term “series of deductions”, and nor was there any express limit on the permissible gap between deductions in a series. The word “series” therefore had to be given its ordinary meaning, albeit in the context of the legislation it appeared to mean a chronological series or a series over time.
- In this context, it was possible for there to be different gaps between underpayments, and for the underpayments to be different amounts, and for a series of deductions still to exist over time.
- The legislation also didn’t suggest that the underpayments had to be consecutive, which meant that there was no reason why a lawful payment should break a series.
- More relevant to whether there was a series was whether the underpayments were factually linked, which they were, by virtue of the fact that they all resulted from the failure to calculate holiday pay by reference to normal remuneration rather than basic pay.
If this decision becomes binding in the rest of the UK it will increase the cost of holiday pay claims significantly, even with the 2-year limit on backpay that exists in Great Britain. If the case is appealed to the Supreme Court (which appears highly likely given the sums involved) and the claimants are successful, then the decision will become binding, and even if not appealed the decision will be persuasive authority for the remainder of Great Britain. It is notable that this is not the first time that a holiday pay decision in Northern Ireland has shaped the course of the law in the rest of the UK, with Patterson v Castlereagh Borough Council leading the trend on the inclusion of voluntary overtime pay in normal remuneration.
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