The claimants included police constables and sergeants in the PSNI as well as civilian employees of the Police Authority. It was argued that overtime payments and other allowances were not included in the calculation of normal pay for the purposes of holiday pay entitlement.

The tribunal made clear that overtime payments and allowances should have been included, on some basis, within the calculation of holiday pay. By not doing so, a clear entitlement under the Working Time Directive had been ignored and avoided for a significant period of time. It also decided that there could be ‘no rational argument’ for saying that voluntary and non-guaranteed overtime should be excluded from holiday pay calculation so long as they are sufficiently regular to form normal pay.

Another key aspect of the judgment was the rejection of the EAT authority of Bear Scotland.  The EAT had confirmed that a three-month gap between underpayments of wages breaks a ‘series of deductions’, which limits employees from making retrospective claims for underpaid holiday pay. The tribunal here rejected the EAT’s interpretation of ‘series’ and held that it should not be followed in NI. Instead, the definition of the ordinary word “series” must be considered in the light of the circumstances of each individual claim.

Practical Lessons

This decision lands the respondents with a bill of around £30m relating to the unlawful deductions dating back 20 years. More generally, all forms of overtime should be considered in the calculation of holiday pay. The case is, however, particularly noteworthy for the clear rejection of the Bear Scotland authority. Bear Scotland states that workers will only be able to link underpayments of holiday if there are no gaps of three months or more between underpayments. This tribunal decision firmly rejects that view and holds that there must a judgement made on a case by case basis and that a ‘series’ is not automatically broken by any gap. This may include gaps due to absence related to maternity, maternity related illness, disability related illness etc. This decision will almost certainly be appealed, and the Court of Appeal will have to decide on the status of Bear Scotland in NI.
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