PSNI V Agnew: What should employers do?

In the case of PSNI v Agnew, the key issue centred around the calculation of holiday pay and how far back claims for underpayment could extend. This stemmed from a European Court of Justice decision in Williams V British Airways Plc, which required holiday pay to include regular allowances, overtime, and commission.

The Police Service of Northern Ireland (PSNI) accepted they had incorrectly paid holiday pay but questioned the extent of retrospective claims. The Supreme Court ruled that liabilities could extend back to 1998, the inception of the Working Time Directive (1998), potentially costing PSNI between ￡30-40 million for 3,380 police officers and 364 civilian employees.

This ruling has significant implications for other employers, especially those who had been awaiting the outcome to gauge their financial risk. In Great Britain, the Deduction from Wages (Limitation) Regulations 2014 limits claims to two years for cases post-July 2015.

However, for Northern Ireland, retrospective claims may be challenging due to a seven-year limit on financial record retention. Further clarity is expected from Tribunal cases in Northern Ireland, though appeals are likely.

A key aspect of the ruling is that the “three-month gap” rule cannot be used in claims about underpayments. Continuity is not broken by a three-month gap between holidays or by a holiday without overtime in the preceding 12 weeks, as the series of deductions are linked by a “common fault.”

Additionally, the Supreme Court’s stance that workers view holidays as a composite whole, without distinguishing between Working Time Directive leave, UK statutory leave, and contractual leave, complicates matters.

Different rules for carryover and pay for various leave types add to this complexity. Employers who differentiate between leave types may continue to do so, provided it’s clearly stated in contracts or policies.

Government Proposals for GB (Effective 1st January 2024):

• Maintain two rates of pay for holidays.
• Allow rolled-up holiday pay for irregular hours/part-year workers.
• No requirement for employers to record daily working hours as per WTR.
• Calculate entitlement for irregular hours/part-year workers as 12.07% of hours worked, addressing ambiguities from Harpur Trust v Brazel.

These proposals do not extend to Northern Ireland.

Helen O’Brien our Senior?HR Consultant?advises employers on what they should do;

1. Do an audit of holiday pay and how it has been calculated.
2. Pay correctly going forward from now. Employees still have to claim within 3 months of the last unlawful deduction.?
3. Any employer wishing to continue to pay differing rates for different types of holidays i.e., normal pay for 4 weeks and basic pay for the rest, should outline this in the employee contract or the handbook.

The recent legal developments surrounding holiday pay calculations present both challenges and opportunities for employers. By understanding these changes, conducting thorough audits, and implementing best practices, employers can navigate through this complex landscape. Keeping up to date with current employment laws is key to reducing financial risks and ensuring compliance.

Find out what else is coming in 2024

Christmas Party Memo

As Christmas work parties are now in full swing, make sure you have sent a Christmas party memo before the party, helping to protect both the business and employees.

The?Christmas work party?season?is a great team-building opportunity, turning workmates into real mates and allowing colleagues to get to know each other in more informal surroundings. Unfortunately, because of various pieces of legislation, employers need to set out the standards of?acceptable behaviour?for their workers at the?Christmas Work Party?(or at least explain this clearly to staff beforehand).

We have a template Christmas work party memo for you, simply copy and paste it to emails!