Blog: Employers’ relief - EAT decision on Holiday Pay deductions confirmed



Katy Wedderburn

Katy Wedderburn explains a decision of the Employment Appeal Tribunal that confirms a three-month gap breaks the series of deductions for Holiday Pay (and other unlawful deductions) claims.

In Fulton and Another v Bear Scotland Ltd UKEATS/0010/16/JW, the Employment Appeal Tribunal (EAT) has confirmed that the previous EAT decision that a gap of more than three months between non-payments or underpayment of wages (and in this case, holiday pay) broke a ‘series’ of deductions for the purpose of bringing an unlawful deduction from wages claim was binding and the Employment Tribunal could not depart from it.

Case history

This is the most recent decision in the on-going holiday pay claim appeals. The EAT decided in an earlier claim involving Bear Scotland and two other cases that any payments received in relation to non-guaranteed overtime which employees required to work counted when calculating holiday pay for the purpose of the first 20 days’ annual leave in a year under the Working Time Directive. In the same judgment, Mr Justice Langstaff decided that a gap of more than three months between deductions of wages breaks the chain in a ‘series’ of deductions in relation to a claim for unlawful deduction of wages. The Bear Scotland case was then remitted to the Employment Tribunal which applied Mr Justice Langstaff’s decision and dismissed claims (or parts of claims) where more than three months had passed between successive non-payments or underpayments of holiday pay as being time-barred.

Current Appeal

Although they had not appealed against the EAT’s decision, above, the claimants appealed to the EAT arguing that the decision of Mr Justice Langstaff in relation to the 3-month gap was not binding on the Tribunal; it only created a strong presumption that the claim was time-barred.  Other points of appeal were also raised.

The EAT dismissed the appeal.

Implications

Employers can now breathe a sigh of relief as this decision confirms that tribunals are bound to find that a break in a series of deductions of more than three months’ will break the chain for the purpose of time-bar in holiday pay; and other claims about unlawful deductions of earnings under section 13 of the Employment Rights Act 1996. It means the potential liability of many employers in holiday pay claims is likely to be significantly reduced.