09 October 2023
On 4 October 2023 the Supreme Court (SC) issued a judgment in the Chief Constable of the Police Service of Northern Ireland and another v Agnew and others (Northern Ireland) case.
The key part of the judgment relates to the three-month series rules when backdating unlawful deductions from wages. The case of Fulton v Bear Scotland previously established that a gap of three months would break a series and therefore anything further back than that would be out of time to claim. The SC has now ruled that where underpayment can be linked by a common fault this would not necessarily bring the series to an end.
“A series does not require a contiguous sequence of deductions and a gap of more than three months between deductions does not necessarily bring a series to an end. A correct payment of holiday pay does not break a series if that correct payment was calculated by reference to basic pay.”
In this case, as the payments for holiday had only used basic hours, and the processing method was the same in each payment, even for occasions where more than three months had passed, these can be seen as linked.
Additionally, a lawful payment in between a series of unlawful ones would not bring a series to an end if the underlying issue is still present. This could happen where a payment would correctly use only basic pay to calculate as no overtime was done in the reference period, while an unlawful payment reference period should have included an element of overtime. In this example the error is still consistent, despite one occasion where the method coincidentally resulted in a correct outcome, the series is therefore linked.
The case as seen here relates to Northern Ireland, where there is no backstop for backdating claims. In the rest of the UK there is a two-year backstop, still, this could represent a very large liability for many businesses that may have been operating non-compliant holiday pay calculations. Coupled with the recent Harpur Trust v Brazel case many businesses would be best to review their situation and assess the risk to the business of backdated claims that could not stretch further than where a three-month break would break a series.
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