Holiday Pay Ruling: How Will It Affect the UK Workforce?

With the Chief Constable of the PSNI and another v Agnew and others receiving the Supreme Court’s decision, issues regarding holiday pay have now been resolved. Disputes concerning claims for a series of underpayments, ‘breaks in the chain’, and how far back one could claim were all addressed.

Following the Supreme Court’s decision, employers will be on high alert to ensure they comply with this ruling. What’s more, employees who believe their holiday pay calculation was incorrect may want to claim compensation. This is because those previously thought to be ineligible may now be entitled to compensation.

Contact us today to determine if you can claim compensation because your annual leave pay was underpaid. We have many years of experience dealing with similar cases. So, an employment lawyer from our firm could help you through the legal process.

PSNI Officers Claim They Were Underpaid By Their Employer

Police Service of Northern Ireland (PSNI) officers and civilian employees initially brought their case before an employment tribunal in 2018. The PSNI officers took the PSNI and the Police Authority for Northern Ireland to court over disputes with their holiday pay.

The problem was that the officers only received basic pay during annual leave. However, European case law has established that annual leave pay should include normal remuneration such as overtime or commission. Although the PSNI accepted their error, they contested several elements of the claim.

Supreme Court Upholds The Northern Ireland Court Of Appeal’s Decision

Despite the PSNI admitting fault, they disputed specific points raised in the holiday pay claim brought against them.

For starters, they argued that under the Working Time Regulations (Northern Ireland) 1998 (WTR), employees can only claim for underpayments made in the last three months. Furthermore, they stated that employees couldn’t utilise the Employment Rights (Northern Ireland) Order 1996 (ERO). The ERO allowed underpayment claims to be brought within three months of the last infringement but could go back further.

However, the Supreme Court rejected this argument, holding that the EU principle of equivalence prevents national rules from being less favourable than domestic rights. The Supreme Court went on to say that providing an infringement occurred in the last three months, PSNI officers could claim back to the later of the start of their employment or 1998. This was the date the WTR was introduced.

The second issue concerned ‘breaks in the chain’ regarding a series of underpayments. The PSNI argued that gaps of greater than three months between unlawful deductions from holiday pay broke the series. They also asserted that intermittent correctly calculated payments broke the chain. In either circumstance, they believed this prevented a series of underpayment claims from being made. If this was the case, the officers could only claim up to the ‘break in the chain’.

Again, the Supreme Court dismissed their argument, upholding the Court of Appeal’s interpretation. They pointed out that the legislation was in place to prevent the exploitation of workers. They also stated that because a common fault linked each miscalculation, a series existed despite the supposed ‘breaks’ the PSNI suggested.

More Claimants Eligible For Compensation Following The Court’s Ruling

Following the Supreme Court’s decision, claimants can pursue holiday pay underpayment compensation when previously they would’ve been thought to be ineligible. It’s been established that employers cannot make irregular correct payments to ‘break the chain’ of a series of underpayments. Furthermore, employees won’t be punished for taking longer than three months between periods of annual leave. Therefore, if a common fault is established between underpayments, a series can be claimed despite supposed ‘breaks in the chain’.

What’s more, the duration of time a claimant can claim back was previously thought only to be three months. The Supreme Court’s ruling outlines that this isn’t the case. Due to The Deduction from Wages (Limitation) Regulations 2014, claimants in Great Britain can only claim back a maximum of two years for any unlawful deductions claims brought after 1 July 2015. Despite this limitation, it improves the originally thought three-month time limit.

However, these limitations don’t apply in Northern Ireland (NI). As such, those in NI can claim back to the later of when they began their employment or 1998. This also applies to Great British and international companies with employees in NI.

As a result of the Supreme Court’s decision, employees who’ve experienced holiday pay underpayments could newly be entitled to claim compensation. If you want to know if this ruling affects you or if you can claim compensation, get in touch with us today.

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