The Northern Ireland Court of Appeal (NICA) has handed down a significant judgment in the case of the Chief Constable of the Police Service for Northern Ireland and the Northern Ireland Policing Board v Agnew and others.
Over 4000 police officers and civilian support staff brought Tribunal cases claiming that they had suffered unauthorised deductions from their wages and a breach of their rights under the Working Time Regulations (NI) 2016 (and its forerunner – the Working Time Regulations (NI) 1998). The claims related to a failure to take matters such as overtime and various allowances into account when calculating holiday pay.
In November 2018, an Industrial Tribunal gave its decision in a number of test cases which found in favour of the police officers and civilian support staff. The PSNI and the Policing Board appealed that decision. The NICA has now essentially upheld the Industrial Tribunal’s original decision – leaving the PSNI and the Policing Board facing an estimated bill of £40 million. The judgment gives helpful guidance on a number of matters, including the following:
1. Claims for unauthorised deductions from wages must be lodged with the Tribunal Office within three months of the date of the alleged deduction (or within three months of the last deduction where the employee is alleging that there has been a series of such deductions). The NICA confirmed that whether there is a series of deductions through time is a question of fact.
A break of three months or more does not necessarily end a series of deductions and neither does the fact that the employer happens to pay the individual correctly (e.g. in a situation where the employee happened not to do any overtime in the period preceding the date when they took a holiday).
The NICA said: “We consider that identification of the factual link in the alleged series answers the question as to whether correct payments of holiday pay breaks the series. We consider that the factual link in these cases is the common fault of paying basic pay as holiday pay regardless of any consideration of overtime or allowances.
“On some occasions that common fault led to unlawful deductions but on others if the worker concerned was not paid overtime and did not receive any relevant allowance during the reference period, it would have led to the correct amount being paid as holiday pay because normal pay and basic pay would have been the same. However, we consider that a payment of the correct amount was still factually linked with its predecessor by the common fault of paying basic pay regardless of any consideration of overtime or allowances during the reference period.
“We do not consider that a series is broken by a lawful payment of holiday pay if the lawful payment comes about by virtue of the common fault or unifying or central vice that holiday pay was calculated by reference to basic pay rather than normal pay.”
As a result, the Police Officers and Civilian Support staff will now be able to seek compensation for underpayments of holiday pay back to November 1998 (when the Working Time Regulations came into force) or to the start of their employment (if they commenced employment after 1998).
2. Holiday pay should be based on an individual’s normal pay and should take into account both basic pay and matters such as overtime and various allowances.
This raised the question of what period of time should be used to assess someone’s normal pay. The NICA agreed that the reference period is fact sensitive and requires individual analysis on a case-by-case basis. The NICA encouraged the parties to agree a “pragmatic, administration-friendly method for calculating and paying “normal pay” based on averages taken over a rolling 12-month period immediately preceding the period of leave” but recognised that there was no obligation on them to do so.
The right to have overtime and other allowances taken into account when calculating holiday has been recognised for several years. However, this judgment shows that employees in Northern Ireland can potentially pursue claims for historical underpayments of holiday pay which stretch back many years.
Finally, this decision relates specifically to Northern Ireland but it may also end up having an impact in England, Wales and Scotland if the Courts and Tribunals there follow the guidance provided.