Supreme Court judgment handed down in Chief Constable of the Police Service of Northern Ireland v Agnew & others

The Supreme Court has today handed down judgment in the case of Chief Constable of the Police Service of Northern Ireland & PSNI another (Appellants/Cross-Respondents) v Agnew & others (Respondents/Cross-Appellants) (Northern Ireland) [2023] UKSC 33.

The judgment clarifies a number of important points on the proper calculation of holiday pay.

For many years both Police Officers in Northern Ireland and civilian staff of the PSNI have been paid holiday pay based on their basic rate of pay rather than their ‘normal pay’ (which includes overtime).

Civilian staff are able to bring their claims under the ‘unlawful deductions’ provisions of the Employment Rights (Northern Ireland) Order 1996, which are identical to the unlawful deductions provisions in the Employment Rights Act 1996 covering Great Britain; and can thus claim in respect of a series of deductions potentially going back as far as 1998.

The main issue in the case was whether Police Officers, not being workers in the traditional sense, could also rely on those provisions.

First, applying the EU principle of equivalence, the Supreme Court upholds the decision of the Northern Ireland Court of Appeal that police officers are entitled to claim in respect of a series of deductions and thus can also claim in respect of the underpayment of their holiday pay as far as 1998. They are not limited to the period of three-months leading up to the presentation of their claims to the Employment Tribunal.

Next, disapproving the decision of the EAT in Bear Scotland Ltd v Fulton [2015] ICR 221 (EAT) (“Bear Scotland”) the Supreme Court holds that a relevant series for the purposes of a claim of unlawful deductions is not necessarily broken by a gap of three-months between such deductions.

The Supreme Court went on to hold that the PSNI had made a series of unlawful deductions, each being factually linked to its predecessor by the common fault or unifying or central vice that holiday pay had been calculated by reference to basic pay rather than normal pay. Further, the series was not broken by a lawful payment of holiday pay if the lawful payment came about, as it did from time to time, because the worker concerned was not paid overtime in the reference period and so was not in fact underpaid.

The Supreme Court also gave guidance on some consequential matters:

• When a worker takes annual leave, no distinction is to be drawn between what is known as ‘EU leave’ - the four weeks annual leave mandated by EU law - and the additional 1.6 weeks’ leave required by domestic law. All the leave to which a worker is entitled must form part of a single, composite pot; and

• When calculating the daily rate of normal pay, it is not appropriate to use the number of calendar days in a year. The maintenance of remuneration and what constitutes normal remuneration is a question of fact, just as the reference period is a question of fact, and both should be addressed in evidence in individual cases.

As well as resolving important points of principle, this judgment has enormous implications for the Police Service in Northern Ireland. If the Appellants had succeeded in their appeal the likely cost of remedying their failure to properly calculate holiday pay was in the region of £300,000. As a result of this judgment it is now likely to cost in excess of £30 million.

The lead claimants in the case are represented by Jason Galbraith-Marten KC of Cloisters and Peter Hopkins of the Bar Library in Northern Ireland, instructed by John McShane of MTB Solicitors (Belfast).