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Police short-changed holiday pay for decades

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A Supreme Court case in the UK highlights how members of the Northern Ireland police force have been short-changed holiday pay for decades. Now police staff they could be getting it all back. Umbrella company workers should take notes, say contractor industry experts

The UK Supreme Court has dismissed an appeal made by the Police Service of Northern Ireland leading to a judgment that could see thousands of police officers and staff paid the holiday pay they are entitled.

The case could also make it easier for umbrella workers to claim for historic underpayments of holiday pay, or where pay was withheld.

“This ruling appears to mean that workers who have been denied holiday pay claims will be able to go back many years provided the payments are part of a “series” – a term being debated,” says Dave Chaplin of ContractorCalcuator UK.

The judgment statement said respondents to the appeal were a mix of police officers from the Police Service of Northern Ireland and civilian staff. Respondents brought claims before the Industrial Tribunal to recover sums which they should have been paid since November 1998 as part of their holiday pay when they took the annual leave to which they were entitled each year.

“They were not paid these sums because it was thought for many years that it was sufficient to pay the Respondents an amount equivalent to their basic pay for the weeks they were on holiday,” said the statement.

They should have been paid their ‘normal’ pay when they were on holiday, not just their basic pay. That normal pay should have included an element for overtime because many of the Respondents regularly supplemented their pay by working compulsory overtime.

The judgment continued: “It later became clear from case law both in England and in the Court of Justice of the European Union that, in so far as the annual leave that the Respondents took each year was leave that they had a right to take under the EU Working Time Directives, they should have been paid their ‘normal’ pay when they were on holiday, not just their basic pay. That normal pay should have included an element for overtime because many of the Respondents regularly supplemented their pay by working compulsory overtime.”

Landmark case that should get umbrella workers’ attention

Crawford Temple, CEO of Professional Passport, an independent assessor of payment intermediary compliance says it is a “landmark case” and one that will serve to have a significant impact on the umbrella sector and how employers calculate and manage holiday pay for their workers. 

“Today’s ruling now imposes rules on employers to ensure that holiday pay is calculated correctly in line with the hours worked,” says Temple.  “Undoubtedly, we could now see retrospective claims on holiday pay that have been miscalculated,” he says.

Temple urges all employers, including umbrella companies, 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. 

“This case comes on the back of the Harper Trust v Brazel case in 2022 which laid out that staff who only work part-time i.e. term time as teaching staff, should receive their full entitlement of annual leave,” says Temple.

He says the case created “further complexity” for the umbrella market to ensure the correct application of holiday pay is made.

“We are still awaiting the outcome of the recent consultation launched following the Harpur Trust case which seeks to amend legislation to simplify the calculation of holiday pay for the umbrella sector,” he says.

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