Arrears of holiday pay – latest developments

Just as we approach the summer holiday season, yet another unhelpful holiday pay case has come along! Effectively this calls into question the leading English (Bear Scotland) case, which decided that a gap of three months plus, between holiday pay under payments, was sufficient to break continuity when claiming holiday pay arrears.

The Bear Scotland case had been helpful to employers because it meant, for example, that an employee claiming underpayment of holiday pay at Easter, was unlikely to be able to include an underpayment for the preceding Christmas holiday, where there was more than a three month gap between the two periods of holiday, during which no underpayment had been made.

However the Court of Appeal in Northern Ireland has now decided, in the Agnew case, that ‘workers’ (and this is of course a ‘worker’ benefit, rather than being limited to employees) do not lose the right to claim earlier outstanding arrears of holiday pay, provided there is a sufficient link to make it a “series” of underpayments. The Court in Agnew held that the decision in Bear Scotland was wrong, and could lead to unfair results.

Although the Agnew case concerned NI law, and so is not formally binding on Employment Tribunals in England and Wales, it is highly likely that it will be cited in test cases here, which Trade Unions will be keen to champion.

The good news is that the backstop (sorry!) of 2 years’ arrears still applies in England and Wales. Also the Agnew case has had little general publicity, but it is certainly something to be aware of, if employees’ threaten claims for holiday pay arrears. The reason is that reliance on Agnew, to challenge the English Courts’ ruling in Bear Scotland, could make quite a difference to the quantum of holiday pay claims.

Other than that, happy holidays!