The UK Supreme Court has dismissed an appeal made by the Police Service of Northern Ireland (PSNI) and ruled that it will have to pay approximately £40 million in holiday pay to its officers.
In 2018, an industrial tribunal determined that unlawful deductions were made from the holiday pay of nearly 3,750 PSNI officers and civilian staff over 20 years, because it was paid on their basic contractual rate and payments for any overtime had not been included. The tribunal ruled that holiday pay was calculated based on employees’ basic working hours rather than considering the actual hours worked.
The Court of Appeal in Northern Ireland disagreed with the time restrictions and claimed they were arbitrary and unfair. This decision was challenged by then-Chief Constable George Hamilton and the Policing Board, but the ruling was upheld in 2019, resulting in the PSNI escalating the case to the Supreme Court.
Jo Moseley, from the employment team at Irwin Mitchell, said: “Although the decision offers clarity on an issue that many organisations have been concerned about, employers won’t be able to use technical arguments to limit their liability for underpaid holiday pay claims.
“That said, the situation is slightly different in England, Wales and Scotland because the government introduced legislation to limit how far back individuals can bring unlawful deduction from wages claims, to two years. Northern Ireland didn’t do this. But, even with these restrictions, some employers will still have to pay their staff a substantial amount to settle their cases.”
Crawford Temple, chief executive officer of Professional Passport, added: “It is a landmark case and one that will have a significant impact on how employers calculate and manage holiday pay for their workers. Undoubtedly, we could now see retrospective claims on holiday pay that has been miscalculated. I would urge all employers, including umbrella organisations, to now take time to review and evaluate their holiday pay practices before they are potentially hit with a host of back claims, which in the UK could go back as far as two years.”
Police Service of Northern Ireland has been contacted for comment.