Irwin Mitchell’s Specialist Employment Lawyers Highlight Significance Of The Case

The Supreme Court case will deliver its judgment tomorrow (4 October) in an eagerly awaited case about holiday pay which could lead to businesses facing thousands of compensation claims from their employees.

In the case of Chief Constable of The Police Service of Northern Ireland and another v Agnew and others, the Court will address crucial issues surrounding unlawful deductions and underpayments of holiday pay.

Expert Opinion

"This case has the potential to redefine the landscape of holiday pay.

“The case has gained attention due to its potential impact on how employers currently can limit their liability for underpaid holiday pay and the method for determining back pay in cases where there has been a break in underpayments.

“Some businesses will be bracing themselves for the outcome because if historic holiday pay claims can be brought after gaps of three months or more between periods of underpayment, then it has the potential to be very costly.”
Jo Moseley, an expert from Irwin Mitchell's employment team

Background

In 2014, the Employment Appeals Tribunal in Bear Scotland v Fulton, decided that workers who received voluntary overtime and some allowances should have those included in their holiday pay. That decision meant that thousands of workers had been underpaid and many decided to bring claims to recover their losses. But the EAT, controversially, made it more difficult for workers to recover all of their losses because of the way it chose to interpret statutory language around deductions.

As the law currently stands, in England, Scotland, and Wales, a worker who wants to recover underpaid holiday has to bring a claim in the employment tribunal within three months of the underpayment, or within three months of the last deduction in the case of a series of underpayments. Since 2014, workers have not been able to recover underpaid holiday if there has been a gap of more than three months between any two shortfalls in pay. The EAT also differentiated between the first four week holiday pay and the remaining 1.6 weeks and these interpretations have made it virtually impossible for workers to include underpayments that occurred in previous leave years which has severely prevented many Claimants’ from recovering all of their losses.

The claimants in this case became aware of the discrepancy in their holiday pay following the Bear Scotland decision. Since then, they have filed complaints for unlawful deductions and underpayments of holiday pay, seeking to rectify the situation and ensure fair compensation for their annual leave. At the time the claims were issued (2015/16) they were valued at around £30 million and will be substantially higher now.

The Court of Appeal in Northern Ireland (those decisions aren’t binding on UK courts and tribunals) ruled that the restrictions imposed in 2014 were arbitrary and unfair and were wrong. The Supreme Court decision will reach a final decision on this point.