Northern Irish ruling could lead to employers facing more holiday pay claims

A ruling by the Northern Irish Court of Appeal could lead to workers claiming more underpaid holiday. Workers have to bring claims within three months of an underpayment. However, where there is a series of underpayments, they can bring a claim within three months of the last in the series. The Northern Irish Court of Appeal ruled that a worker does not lose the right to claim for a series of underpayments where there is a gap of more than three months between the underpayments. 

What was the ruling of the Northern Irish Court on under-paid holiday?

In coming to this view, the Northern Irish Court disagreed with an earlier decision of the Scottish Employment Appeal Tribunal in the Bear Scotland case. Employers have been relying on the Bear Scotland decision to extinguish claims where there is more than three months between a series of underpayments, i.e. where a worker works for at least three months between periods of holiday and they pay them correctly whilst they are working. The Northern Irish decision casts doubt on whether this argument will succeed in future cases. 

What impact does this ruling have in England, Scotland and Wales?

The ruling is not binding on employment tribunals in England, Scotland and Wales, but it is persuasive.  It seems likely that workers in future appeals will rely on the Northern Irish decision to try to defeat these arguments by employers.

Does paying the correct holiday pay break the chain?

The Northern Irish Court of Appeal also ruled that an employer does not break a series of underpayments by happening to pay the correct amount of holiday pay. This might come about because the employee did not work any overtime and so did not receive overtime pay in the reference period for calculating holiday pay. If the employer always calculates holiday pay by reference to basic pay, the fact that on some occasions that does not result in them underpaying the worker’s holiday pay does not break the series of underpayments.  

What are the implications of this case?

If appeal courts in the rest of the United Kingdom follow the Northern Irish decision, this could be costly for employers. However, there is a limit on how far back claims can go.  Legislation that applies in England, Scotland and Wales means that claims can only go back two years from the date of the employment tribunal claim. The legislation applies to claims issued on or after 1 July 2015.

Chief Constable of The Police Service of Northern Ireland v Agnew