The judge in the Bear Scotland case held that a gap of more than three months in a 'series of unlawful deductions' from holiday pay breaks the series, meaning that limitation provisions kick in to restrict claims for back pay. However, in the recent ruling in favour of Police Service of Northern Ireland (PSNI) police officers and civilian staff, the Northern Ireland courts explicitly rejected this approach on the grounds that it can "lead to arbitrary and unfair results" and there was "nothing in the [Employment Rights (Northern Ireland) Order] which expressly imposes a limit on the gaps between particular deductions making up a series". The Court of Appeal ruled that back payments of holiday pay owed to PSNI staff should reflect overtime and allowances paid during a 'reference period' before the holiday, as well as basic pay; confirming an earlier decision by the industrial tribunal. However, the appeal court went further than the tribunal in some respects, ruling that the relevant 'reference period' was the number of days that worker had actually worked in the previous year, rather than the full calendar year. It also found that what should be caught by the definition of 'normal pay' for each worker was a question of fact, and urged the parties to agree a "pragmatic, administration-friendly method" for settling individual claims.
BBC News reported that PSNI staff affected by the case could be owed an average of £10,000 worth of back payments stretching back over 20 years, with a combined value of £40 million, following the appeal court's verdict.
Trade union NIPSA said the ruling could go beyond the public sector and affect private sector employees as well.
“Businesses should health-check their payment practices and make sure they are compliant” said Belfast-based employment law expert Craig Patterson of Pinsent Masons and that the court had "confirmed Northern Ireland's divergence from the Great Britain position on the potential liability for holiday claims". "Given the sums of money at stake, it could reasonably be expected for this case to progress to the next stage – i.e. the UK Supreme Court. If that happens, it is possible the Supreme Court justices could approve the NI Court of Appeal decision, in which case employers in Great Britain as well as Northern Ireland could be exposed to significantly larger claims owing to the rejection of the three month gap rule set down in Bear Scotland."
Craig Patterson said that following this ruling, businesses should do three things:
• if they haven't already done so, health-check their payment practices and make sure they are compliant; • assess their potential liability if they identified a current or historic issue; and • consider or take advice on how they wish to proceed.
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NI Court of Appeal ruling on unlawful deductions 9 July 2019
The Court of Appeal of Northern Ireland has confirmed in the case of Chief Constable of the Police Service of Northern Ireland v Agnew (and others) that a series of deductions will not necessarily be broken where there is a gap of 3 months between deductions.
Howes Percival summarises:
The Court found that there was nothing in the Employment Rights (Northern Ireland) Order 1996 ("ERO") suggesting a limit on gaps between unlawful deductions. It recognised that unlawful deductions can occur at different intervals and in different amounts, provided there is sufficient frequency of repetition in the deductions. The Court pointed out, however, that it is vital to identify the alleged series. Where there is sufficient similarity of subject matter so there is a factual link between deductions that will be sufficient to amount to a series. This suggests that where there is insufficient factual link, a series could still be broken by a gap of three months or more. Whilst this decision relates to the Northern Irish law, and is therefore not binding on English Employment Tribunals, it is persuasive. The ERO is identical to its UK equivalent, the Employment Rights Act 1996 and therefore the decision in Agnew could turn out to be very compelling in cases of a similar nature.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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