Supreme Court rules on historic holiday pay claims in landmark case

Harry Hazelwood
Harry Hazelwood

Published: October 18th, 2023

7 min read

The Supreme Court has finally handed down its judgment in the case of Chief Constable of Police Service of Northern Ireland v Agnew and is a landmark case on the calculation of holiday pay in the UK, clarifying the rights of workers to claim for underpaid holiday pay.

The case involved a group of police officers and civilian employees of the Police Service of Northern Ireland (PSNI) who brought claims for underpayment of their holiday pay, dating back to 1998.

Their employers had not paid the correct sum of holiday pay as the belief at the time was that it was sufficient to pay the respondents an amount equivalent to their basic pay for the weeks they were on holiday. Later case law revealed that they should have been paid their "normal" pay whilst they were on holiday, not just their basic pay and that this normal pay should have included an element of overtime as many of the respondents regularly supplemented their pay by working compulsory overtime.

Despite accepting the respondents had been underpaid, the PSNI argued that the claims were limited to the three months leading up to the presentation of the claims to the Employment Tribunal, under Regulation 30 WTR (NI) 1998. However, the claimants sought to rely on an alternative provision and argued that they were entitled to claim for historic arrears of holiday pay, under Regulation 16(1) WTR (NI) 1998, which allows workers to claim for a 'series of deductions' going back further than three months.

The case law of Bear Scotland Ltd v Fulton established the precedent here, which held that there would be a break in the chain of any 'series of deductions' where a period of more than three months had elapsed between the deductions.

The Agnew case raised two important issues: first, whether the claimants could seek to rely upon this alternative provision to recover the underpayments and thereby extend the period further than three months; and if so, whether these underpayments were part of a 'series' within the meaning of the alternative provision.

Eventually, after many years of deliberation on these points, the Supreme Court upheld the decision of the Court of Appeal and found that the claimants were entitled to rely on the alternative provision and therefore could seek to recover the historic arrears of holiday pay. The Court held the gap of more than three months between underpayments did not break the 'series of deductions' for the purposes of a claim for holiday pay.

The Court found that a strict three-month time limit for making a complaint in respect of each of a number of acts would impose a "wholly unreasonable" burden on a worker if the acts formed a series because they were connected in a relevant way. Thus, overturning the principle outlined in Bear Scotland Ltd.

A further issue that was considered was whether police officers were entitled to claim for underpaid holiday pay, even though they are not workers in the traditional sense. The Court found that police officers are entitled to the same employment rights as other workers, including the right to holiday pay, under the EU principle of equivalence.

The Agnew case represents a shift in the holiday pay case law and has significant implications for employers. In Great Britain, the backstop under the Deduction from Wages (Limitation) Regulations 2014 limits any claim, even for a series of underpayments, to a period two years prior to the commencement of the proceedings before the tribunal, however in Northern Ireland, which implements no such backstop, claims may extend much further.

Employers need to ensure that their holiday pay calculations are correct and that they are paying their workers the full amount of holiday pay to which they are entitled. This can be a complex calculation, therefore for more information or advice please contact with our Employment & HR department.

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