An employer calculated holiday pay using basic pay even when employees regularly earned overtime. Because holidays were sometimes more than three months apart, the employer argued that earlier underpayments could no longer be claimed. The Supreme Court distinguished the deadline for bringing a complaint from the question of which underpayments belong to a single series.
The respondents are lead claimants for 3,380 police officers and 364 civilian employees. From 23 November 1998, when the Working Time Regulations (Northern Ireland) 1998 took effect, they received only basic pay for annual leave. Later case law established that the four weeks’ leave derived from the EU Working Time Directives must be paid at normal pay, including an element for compulsory overtime that many regularly worked. Additional leave under the Regulations and conditions of service remained payable at basic pay only, so there was no underpayment of that leave. The first lead claim was presented on 9 December 2015. The appellants estimated that meeting the claims in full would cost about £30 million, against about £300,000 if recovery were limited to three months.
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The time-limit dispute
A complaint under the Working Time Regulations must normally be presented within three months of the payment, unless it was not reasonably practicable to do so. The respondents did not rely on that exception. Article 55 of the Employment Rights (Northern Ireland) Order 1996 allows a complaint of unauthorised deductions from wages to be brought within three months of the last deduction in a series. After Stringer, civilian staff can use that route for underpaid holiday pay. Police officers are treated as workers under the Working Time Regulations, but the Order contains no equivalent deeming provision, and the appellants said they therefore could not use the series extension.
Principle of equivalence
Lord Kitchin and Lady Rose, with whom the other Justices agreed, held that the EU principle of equivalence supplies the extension. Member States may set procedures for enforcing EU rights, but those procedures must be no less favourable than those governing similar domestic actions. Following Levez and Preston, similarity is judged objectively and in the abstract by purpose, essential characteristics, and the role of the rule in the procedure as a whole. It is not necessary that the claimant fall within the class entitled to bring the domestic claim, or that the legislature intended to discriminate against EU rights.
Claims under the Regulations and claims for unauthorised deductions are similar. Both are informal and inexpensive industrial-tribunal proceedings directed at securing the remuneration properly due, and both can recover the same holiday-pay shortfall. Stringer had already treated the routes as substantially similar and noted that the series extension made the domestic route more advantageous. Equivalence therefore requires the more favourable limitation period to be read into the Regulations. It does not confer a direct claim under the Order. The words read in by the Court of Appeal, extending time to three months from the last payment in a series, were a permissible conforming interpretation. The short primary time limit is compatible with effectiveness, but its lack of a series extension is not a fundamental feature that prevents correction. Policy choices made for Great Britain, including the later two-year backstop, do not excuse non-compliance in Northern Ireland.
Because equivalence was accepted, the Court did not decide whether police officers are workers under the Order or whether excluding them would breach Article 14 of the European Convention on Human Rights.
Meaning of a series
Whether deductions form a series is a question of fact. A series is a number of things of a kind following one another in time. Relevant circumstances include similarities and differences, frequency, size, impact, how the deductions came to be made, and what links them. Contiguity is not required. The purpose of the extension, in legislation protecting wages, is to avoid imposing a fresh three-month claim for every repetition of the same fault. A mandatory break after three months would let an employer space deductions so as to defeat claims, penalise workers whose leave fell more than three months apart, and require repeated protective claims.
The Court therefore rejected the view in Bear Scotland that a gap of more than three months ends a series as a matter of law and extinguishes jurisdiction over earlier deductions. The three-month period fixes when the complaint must be presented, measured from the last deduction; it does not define the series. Here each underpayment was linked to the next by the common fault of calculating holiday pay from basic pay rather than normal pay, consistently from 23 November 1998. Intervals longer than three months did not break the series. Nor did a payment that happened to be lawful because the worker had earned no relevant overtime in the reference period, since that payment still resulted from the same method of calculation. Lawful payments of ordinary wages between holidays likewise did not interrupt a series identified as one of holiday-pay deductions.
Order of leave and calculation
There is no rule that the four weeks of Directive leave must be taken, or treated as taken, before additional domestic leave. Describing leave as additional does not dictate its sequence. Workers regard their entitlement as a composite whole, and where the types cannot practicably be separated they form one pot. Treating Directive leave as taken first would risk denying sums that should have been paid and would cut across the purpose of paid leave.
When a daily rate is needed, working days in the leave period should not be divided by calendar days in the reference period. What amounts to normal remuneration, and what reference period is appropriate, are questions of fact for the tribunal. The Court of Appeal’s encouragement of a pragmatically agreed 12-month period was left undisturbed.
Verdict: The Supreme Court unanimously dismissed the appeal. Both civilian staff and police officers could rely on a series of linked holiday-pay underpayments. A three-month gap did not automatically end that series. The industrial tribunal still had to assess individual entitlements and the appropriate reference period for normal pay.
