Northern Ireland’s Supreme Court enables workers to claim unpaid holiday pay dating back years
The Supreme Court in Northern Ireland has overturned an appeal by the Police Service of Northern Ireland (PSNI), which leaves the organisation liable for up to £40m in backdated holiday pay.
The class action brought against the PSNI related to unpaid holiday entitlements, dating as far back as 1998, opening up the Belfast-based police force to costly repayments.
While a decision was initially reached in 2019 at the Court of Appeal in Northern Ireland, the PSNI appealed the ruling on the grounds of the time period it covered. However, that appeal has failed.
As such, all the members of the class action lawsuit – over 3,700 individuals – are now entitled to claim backdated holiday pay from the PSNI.
Quoted in the BBC’s coverage of the result, the Chairman of the Police Federation for Northern Ireland, Liam Kelly, called the ruling a “significant legal milestone”.
This is true for the members of the class action – and for umbrella workers all across the UK.
Decision overrules previous legal precedent
Crucially, this case sets a legal precedent concerning the “chain of deductions”. This ruling is binding, giving workers in Northern Ireland the right to claim unpaid holiday pay, dating back to 1998.
In England, Scotland and Wales there are different statutory time limits; claims can go back to a maximum of two years.
This may have profound implications for umbrella workers who, experts say, all too often do not receive their holiday pay entitlement.
Until now, umbrella workers who had not received holiday pay entitlements had a maximum time limit of three months and one day to make a claim against a deduction (or series; also called a chain of deductions).
This was determined by previous legal precedent, which stated that a gap of three or more months between deductions would ‘break’ the chain of deductions.
Now, however, workers in the UK can claim unpaid holiday pay dating back two years. This could mean thousands of flexible workers – including umbrella workers – are eligible to receive significant sums.
“A very clear message” for shady operators
Julia Kermode is CEO of PayePass, a provider of umbrella payroll auditing software. She welcomed the development, calling it a “landmark judgement” that would send “a very clear message to dubious umbrella companies and recruitment agencies” that withhold holiday pay.
Having previously held the position of chief executive at the Freelancer & Contractor Services Association (FCSA), Kermode has long been part of efforts to introduce certification and regulation to the industry, to root out “immoral operators”.
Kermode added that the result was “shining the spotlight on holiday pay”. In the contingent workforce, there are documented cases of “profiteering through withholding holiday pay”, she said. “And from our experience of auditing supply chains, we know that end-clients are usually totally unaware of it”.
Speaking about the ruling, Kermode suggested there would be “major implications” for flexible workers.
“In simple terms, this case means that the 3-month window to claim underpayments is not enforceable, so unreceived holiday pay can be claimed back from employers dating back two years irrespective of whether they received it on and off”, she explained.
“It could mean thousands to every temp and contractor who hasn’t received their holiday pay, and it could easily cost this industry billions”.
“These immoral operators are now at risk of claims for staggering sums of money which is legally owed to flexible workers”, Kermode concluded.
Leave a Reply