Holiday Pay & Unlawful Deductions

September 29, 2019, By

In the UK, workers are entitled to 4 weeks’ annual leave under the European Working Time Directive and an additional domestic right to 1.6 weeks’ leave. A worker may bring a complaint before an Employment Tribunal where an employer has failed to pay statutory holiday pay. The 3 month time limit for bringing a claim runs from the date on which it is alleged the payment should have been made. There is no provision for linking a series on non-payments or underpayments under the relevant provisions (the Working Time Regulations 1998), which means that a claim under the Regulations for underpayment of holiday pay must be submitted every time a worker is denied his or her statutory holiday pay entitlement.

Case law has developed and has held that workers can circumvent this problem by bringing claims for holiday pay under section 13 of the Employment Rights Act 1996 which prohibits unauthorised deductions from wages. This is possible because such claims can cover a “series of deductions”, in which case the 3 month time limit runs from the last deduction in the series. Further case law has developed in which it has been held that gaps of 3 months or more between any 2 deductions in a claim will break the “series” of deductions”.

In Chief Constable of the Police Service of Northern Ireland and anor v Agnew and ors Court of Appeal the Northern Ireland Court of Appeal declined to follow the approach of the EAT in previous rulings as the effect of a 3 month gap in a series of deductions. Over 3,300 police officers and 364 civilian employees brought claims under the relevant legislation in Northern Ireland, that they had been underpaid holiday pay since November 1998.

The Court of Appeal noted that “series” was an ordinary word. Whether there had been a series of deductions through time was a question of fact. In the Court’s view, a series could be constituted by deductions with a sufficient frequency of repetition but occurring at different time intervals and in different amounts. A claimant did not have to establish that every payment made during a particular period of time was subject to an unlawful deduction. In this case, the alleged series was a series of unlawful deductions in relation to holiday pay. There just had to be sufficient similarity of subject matter such that each deduction in the alleged series was factually linked. In this case the method of calculation of holiday pay factually linked all holiday payments consistently since 23 November 1998. Occasionally a claimant might not work any overtime during the reference period of calculation of the holiday pay in which case calculation method would not result in an unlawful deduction from wages. The Court held that a lawful payment in those circumstances would not break the series of deductions.

Although the case is not binding in Great Britain, it is likely to be of persuasive authority, in the event that any appeal is brought in holiday pay cases on any of the points raised.

If you’re looking to make a claim to the Employment Tribunal regarding unlawful deductions of pay, you should expect to wait longer than ever, with Tribunal waiting times rising compared to last year. If you’re having problems at work that you think go against your contract of employment, our team are here to help you take legal action where it is needed.