In Chief Constable of the Police Service of Northern Ireland and anor v Agnew and ors the Supreme Court confirmed that a series of unlawful deductions from wages will not necessarily be broken by gaps of more than three months between underpayments. The “three-month gap rule” had, up to this point, been an argument available to employers in Great Britain seeking to limit their liability for historical underpayments. The latest judgment in this long running claim is significant and could open the door to many more back-dated holiday pay claims.
Chief Constable of the Police Service of Northern Ireland and anor v Agnew and ors
Close to 4,000 civilian and police officer claimants (“Claimants”) brought claims against the Chief Constable of the Police Service of Northern Ireland (“Chief Constable”) for unpaid holiday pay dating back to as early as November 1998. The Chief Constable accepted that the Claimants had been underpaid as they should have been paid their “normal pay” (inclusive of overtime pay) during their 4 weeks of EU guaranteed annual leave as opposed to the “basic pay” they received. The key issue in this case was whether the Claimants were entitled to unpaid holiday pay dating back to November 1998.
Claims for unpaid wages must be submitted within three months of the date of the relevant deduction or, where there is a series of deductions, within three months of the last event in that series.
The Claimants’ position was that the holiday pay underpayments formed part of a series of deductions and providing the claims were issued within three months of the last event in that series, holiday pay dating back to 1998 could be claimed. The Chief Constable argued that a shorter period applied as any gap of more than three months between deductions ended any “series” thereby limiting the Chief Constable’s liability for back dated holiday pay.
Both the Employment Tribunal and the Northern Ireland Court of Appeal found in favour of the Claimants. However, judgments of the Northern Ireland Court of Appeal do not bind the rest of the United Kingdom and the Employment Appeal Tribunal in London had, in Bear Scotland Ltd v Fulton and other cases, found that a series of deductions would be broken by a gap of more than three months between deductions. This meant that the laws of Northern Ireland and Great Britain conflicted for a period, a situation which has now been resolved by the Supreme Court, whose judgments bind the whole of the United Kingdom.
The Supreme Court held that the word “series” means a number of things of a particular kind that follow one another over time. Whether a series exists is a question of fact and consideration should be given to various factors depending on all relevant circumstances, such as the size, frequency, impact, and what links the deductions. The fact that three months may pass between events in the series is irrelevant, and to find otherwise would effectively render meaningless claimants’ right to rely on a series of deductions.
In the present case, the underpayments were of the same kind if they had been made because, in error, the “basic pay” calculation was used. This common fault or “unifying vice” as the Court called it, linked each deduction to its predecessor irrespective of the time that had passed.
The Supreme Court’s judgment has provided much needed clarity in what remains a complex and changeable area of employment law. The Court’s finding that a series will not be broken by a gap of three months or more is perhaps unsurprising, recent cases had suggested that this was the direction of travel. That said, this ruling will most certainly bring rise to similar back-dated unlawful deduction from wages claims, though their impact may be less significant outside Northern Ireland. There is a two-year backstop on unlawful deduction from wages claims applicable in Great Britain hence a case of this type in Great Britain may only have backdated the claims by 2 years, not all the way back to 1998.