Recovering Holiday Pay as part of a ‘series’ of Deductions 

In Smith v Pimlico Plumbers Ltd, the Court of Appeal looked again at the recovery of holiday pay by employees.

One of the devices used by the tribunal to limit the recovery of historic unpaid holiday claims derives from the EAT case of Bear Scotland Ltd v Fulton. In that case the EAT said that where there is a gap of more than 3 months between each deduction claimed (i.e. between each period of unpaid holiday) the gap breaks the chain. Accordingly, there can be no recovery of historic holiday pay claims beyond the point in time where the chain is deemed broken.

While not strictly necessary for it to do so, in Smith v Pimlico, the Court of  Appeal gave a ‘strong provisional view’ that the case was wrong. There was nothing in S.23 of the Employment Rights Act 1996 to suggest that the three-month time limit was intended to restrict or qualify the meaning of a ‘series of deductions’ in this way.

The Court of Appeal also observed that in Chief Constable of the Police Service of Northern Ireland v Agnew, the Northern Ireland Court of Appeal had already departed from the Bear Scotland conclusion and reached the opposite view.

Comment:

It appears from the Court of Appeal’s comments in Smith v Pimlico that the rule in Bear Scotland could now be living on borrowed time in England and Wales. If it were to fall, the next question is how far back might employees be able to go when claiming for unpaid holiday leave? Will the six year limitation period on contract claims contained within the Limitation Act 1980 provide a longstop or does s.23 of the Employment Rights Act 1996 sidestep that provision too?