The Supreme Court has ruled in favour of a tribunal that awarded over 3,700 staff at the Police Service of Northern Ireland (PSNI) holiday pay dating back to 1998, upheld in the Court of Appeals in 2019.<\/p>\n
Under the Employment Rights Act 1996, workers whose holiday pay has been wrongfully deducted may link instances of underpayment dating back two years.<\/p>\n
The ruling states that a gap of three months or more does not constitute a break in this chain of deductions. Therefore, workers can submit a single claim for all deducted holiday pay within a two-year period.<\/p>\n
Previously, a gap of three months or more constituted a break in the chain of deduction, meaning that workers had to file a claim for each instance separately.<\/p>\n
In practice, the ruling means that employees can reclaim underpayments over a longer period of time \u2013 provided there is a pattern of incorrectly calculating holiday pay \u2013 making it far easier to resolve unlawful deductions for up to two years.<\/p>\n
As a result, businesses may now face large liabilities for unlawful deductions.<\/p>\n
It all comes down to how you calculate holiday pay and deductions.<\/p>\n
While some businesses are unlikely to face difficulties, the ruling could spell financial and legal trouble if you employ flexible workers or offer overtime payments.<\/p>\n
Without the right expertise in your team, it\u2019s easy to miscalculate holiday pay on non-standard contracts, variable hours or fluctuations in rate of pay.<\/p>\n
In this case, PSNI faces the \u00a340 million financial burden of an ongoing calculation error.<\/p>\n
We can help you get it right.<\/p>\n