Holiday Entitlement
A full-time employee is entitled to a minimum of 28 days statutory holidays (that includes any bank holidays that may arise within the holiday year). The first 20 days of the holiday entitlement comes from EU provisions and the remaining 8 days arises from UK statutory provisions.
Case law has confirmed that regular overtime / commissions/ bonuses paid to employees needs to be included in holiday pay calculations as related to the first 4 weeks of worker’s holiday period (i.e. 20 days) and if not paid and /or where the full statutory holiday entitlement had not been paid then under the Deduction from Wages (Limitation) Regulations 2014. Claims can only be back dated to two years but only on claims that arose on or after 1 July 2015 but it is subject to the decision in the Sash Window case as below.
Backdated holiday pay
A gap of more than 3 months between underpayments would cut off claims, before that gap as confirmed by a recent tribunal decision where a Pimlico Plumbers worker, Gary Smith, lost his claim for £74,000 in backdated holiday pay. The Croydon employment tribunal ruled that Gary Smith hadn’t filed his claim for backdated holiday pay quickly enough as the tribunal rules required Gary Smith to have claimed missed holiday pay within three months following each holiday period from 2005.
However, a recent Northern Ireland employment case called Chief Constable of Northern Ireland Police v Agnew 2019, the Court of Appeal has cast doubts on the above and held that a gap of more than 3 months between underpayments, will not automatically cut off earlier claims. Instead, each case will turn on its facts.
Also, the Court found that employers cannot deem the first 4 weeks of a worker’s annual holiday as EU statutory leave. Rather, annual leave falls into the same ‘pot’ regardless of its origin and when a day’s holiday is taken, it cannot be categorised as being solely of one type or another.
The decision is not directly binding in Scotland, England or Wales and thus would only affect NI employers, but the case is likely to give fresh impetus to further challenges to the limits of back dating holiday pay arrears given the similar wording of the legislation that applies to Scotland, England or Wales. If the limits don’t apply, claims for underpaid holiday could stretch back to the start of the employer’s relationship with a worker, with an ultimate backstop of 1 October 1998.
Also, it should be noted that the case of Sash Windows v King confirms that the two-year backstop does not apply where the claim for non-payment of holiday pay arises where the individual was denied the opportunity to take holiday.
A question of watch this space for further developments in this complex area.
If this article raises any issues for you or your organisation or you would like further information on holiday entitlement please speak to one of our Quest HR Advisors.
The contents of this article are intended for general information purposes only.
