Update – Holiday pay and claims for historic underpayments

10 October 2023

Summer may feel like a life-time away, but the law in relation to holiday pay doesn’t know what season it is and it is ever-evolving.  The latest change being the long-awaited Supreme Court Judgment in the case Chief Constable of Police Service of Northern Ireland v Agnew.

The Claimants brought claims for underpayment of their holiday pay, going back to 1998. They were over 3,300 police officers and 364 civilian staff working for the police in Northern Ireland. It was found that their holiday pay only included basic pay and did not take into account overtime and was therefore incorrect. The holiday pay should have been calculated based on normal remuneration which includes overtime in this situation. The Supreme Court considered how far back the Claimants were entitled to go.

Workers have three months from the date that the underpayment of the holiday pay was made to bring a claim. Workers can claim for underpayments before this if they can show there has been a series of deductions which are linked though. The EAT had previously concluded in the Bear Scotland v Fulton case that deductions could only be linked in a series if there was a gap of three months or less between each deduction.

The Supreme Court in Chief Constable of Police Service of Northern Ireland v Agnew finally confirms that when deciding whether a series of underpayments of holiday pay is linked, it will be determined on the facts of the case. It is no longer relevant whether there has been a three-month gap between the underpayments.

It is crucial for employers to check that holiday pay is calculated properly, as this case means that workers could claim pay further back than they previously could. Our employment team frequently help operators with holiday pay calculations and can assist with this if needed.

It should be noted though, the decision has not changed the two-year backstop in place for workers claiming an underpayment in their holiday pay. This still cushions the impact for employers of the judgment in Chief Constable of Police Service of Northern Ireland v Agnew.

Please contact our employment team here for advice.