Three month gap will break series of deductions in holiday pay claims

    Three month gap will break series of deductions in holiday pay claims

    In the long-running case of Fulton & anor v Bear Scotland Ltd, the Employment Appeal Tribunal has confirmed that in claims involving ongoing unlawful deductions:

    • a gap of more than 3 months between those deductions will break the series and
    • the Employment Tribunal will not have jurisdiction to hear the earlier claims.

    The claimants had previously been successful in establishing that non-guaranteed overtime should be included in the calculation of holiday pay. However, some of their claims have been found to be out of time because a period of more than three months had elapsed between successive non-payment or underpayments of holiday pay.

    This decision will be welcomed by employers facing claims under the Working Time Directive where they have failed to factor overtime into holiday pay as it severely restricts the ability for workers to bring backdated claims. It confirms that an employer will be able to avoid or reduce back pay claims if they have made payment of the correct holiday pay for three months or more.

    Quite reasonably, some of you may be wondering whether this is now the end of the matter.

    In short, the answer is ‘no’.

    It follows that there is likely to be an increase in litigation concerning whether there has been a gap of over 3 months between deductions. Additionally, the question of whether 'voluntary' overtime should be factored into holiday pay still remains a grey area.

    The leading case, Patterson v Castlereagh Borough Council NIIT/1793/13 decided that it should be. However, this case was heard in the Northern Ireland Court of Appeal and is therefore not binding on cases in this country.

    That said, the case is persuasive and it appears that the English tribunals are choosing to apply it to voluntary overtime/holiday pay claims, so time will tell.

    If you need advice in relation to this or any aspect of employment law, our Employment team will be pleased to help.

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