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Motor Trade Legal News

Holiday Pay: Supreme Court to decide whether a gap of three months breaks the chain in a backdated claim

The Employment Rights Act 1996 provides that, any tribunal claim for unpaid holiday pay generally needs to be brought within three-months of when the payment became due, unless the underpayment forms part of a ‘series of deductions.’  If a series exists, then a claim can be made for all of the underpayments in the series, and the three-month time limit begins to run from the last underpayment.  There is, however, no statutory definition of what amounts to a ‘series’ of deductions.

Following the decision of the Employment Appeal Tribunal in Bear Scotland v Fulton (2014) – where there is a gap of three months between underpayments, this will break any series of deductions, meaning that any underpayments preceding the break will generally be out of time. Mr Justice Langstaff reasoned that for a series to exist, there requires to be both a sufficient factual and temporal link between underpayments, and that a period of more than three months was too long a time to wait before bringing a claim.

However, the Court of Appeal in Northern Ireland has called into question the correctness of this decision.  In Chief Constable of the Police Service of Northern Ireland v Agnew (2019) – a class action involving unlawful deductions from wages relating to some 3,700 police officers and support staff – it ruled that a ‘series’ was not necessarily broken by gap of three months, and that to hold otherwise would lead to “arbitrary and unfair” results.  The Court concluded:

“… if a three-month gap broke a series it would do so when the unlawful deductions occurred consistently and persistently at six monthly intervals but not when they occurred at two monthly intervals. There is nothing in the ERO which expressly imposes a limit on the gaps between particular deductions making up a series. We do not consider that there is anything implied from the terms of the ERO which compels to such an interpretation of a series. As a matter of the proper construction of the ERO we conclude that a series is not broken by a gap of three months or more.”

Although the respective legislative provisions relating to a ‘series of deductions’ are identical as between Northern Ireland and England and Wales; since the Court of Appeal in Northern Ireland is not a court of coordinate jurisdiction, its decision, while persuasive, is not binding in England and Wales or Scotland.  However, Agnew is being appealed to the Supreme Court and the case is due to be heard at the end of June 2021. The Supreme Court’s decision will be binding on all employment tribunals in the UK, which could have far-reaching implications for employers should the decision be upheld – particularly those in Northern Ireland – where the statutory cap of two years on backdated claims does not apply.