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Case law: Northern Ireland ruling throws ‘three-month rule’ in underpaid holiday claims into doubt

Employers in Great Britain (GB) should be alert to the prospect of employees (and their unions) claiming for unpaid holiday pay on grounds that the ‘three-month rule’ should not apply, following a ruling in Northern Ireland (NI), allowing them to claim backdated holiday pay that they would not otherwise be entitled to.

August 2019

This update was published in Legal Alert - August 2019

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

The NI Court of Appeal has ruled in a case relating to backdated claims for police holiday pay that had been underpaid for more than 20 years. It has said the ‘three-month rule’ which the courts have said applies under GB regulations (ie, in England, Wales and Scotland) does not apply under the separate NI regulations.

The three-month rule is based on the fact that claims for underpayment of holiday pay for the four weeks’ holiday required to be given to employees under EU law are technically claims for ‘unlawful deduction from wages’. Under the rule, where the law in England, Wales and Scotland applies, such claims must be made within three months of the underpayment/deduction or of the last of a series of underpayments/deductions – ie, a gap of more than three months breaks the series.

There is, however, a two-year cap on unlawful deduction claims in GB which caps the maximum amount payable in unpaid holiday claims there in any event.

The NI Court of Appeal ruled that there is nothing in the equivalent NI regulations to say that a gap of more than three months between deductions breaks a series, so the ‘proper construction’ of the NI regulations is that ‘a series is not broken by a gap of three months or more’ between deductions.

It also said ‘sufficient similarity of subject matter, such that each event is factually linked with the next...in the alleged series...’ was enough to amount to a series.

However, the wording in the GB and the NI regulations is virtually the same. While NI Law is not automatically binding in GB, rulings of the NI Court of Appeal are treated as persuasive by GB courts. This means if this issue is ever appealed in a case in GB, it is likely an employee will argue that the NI approach is right and the previous GB approach should be overruled.

Operative date

  • Now

Recommendation

  • Employers in GB should be alert to the prospect of employees (and their unions) who make claims for unpaid holiday pay arguing that the NI ruling means the three-month rule should not apply in GB either, meaning that employees can make backdated claims more easily than at present (although the two-year limit on unpaid holiday claims overall will continue to apply).

Case ref: Chief Constable of the Police Service of Northern Ireland v Agnew and Others [2019] NICA 32

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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