Supreme Court closes ‘loophole’, paving the way for temps and contractors to claim thousands in backdated holiday pay from their umbrella or recruitment agency.
The case saw more than 3.700 police officers and civilian staff successfully claim backdated holiday pay from their employer, the Police Service of Norther Ireland (PSNI), which is deemed to have underpaid holiday dating back to 1998. It could cost the PSNI between £30m to £40m.
In essence the judgement means that a gap of three months or more between underpayments of holiday does not break the chain of a series of deductions. So this enables a series of underpayments to be linked, even if there is a gap exceeding three months.
As this case went to the Supreme Court, the ruling is binding for all of UK and Northern Ireland.
Temporary Workers and Contractors
This case paves the way for temporary workers and contractors to lodge similar claims for backdated holiday pay. Many businesses should be worried, especially if they have been reliant on the 3 month break preventing workers accumulating large sums of holiday owed. It’s likely that claims will be worth thousands to each worker and could easily cost the industry billions.
The government is well aware of holiday pay misconduct in the recruitment and umbrella sector, and whilst there might be legal loopholes enabling the practice, common sense has prevailed with the Supreme Court closing one such loophole. Woe betide any provider that is still reliant on legalese to underpin their profiteering from withholding holiday as the tide really is turning in favour of ethical (vs legal) practices.
In addition, we are awaiting the outcome of a consultation earlier this year which should result in rolled up holiday pay being recognised as lawful – which in turn means that dodgy providers will have no excuse for withholding holiday pay from their workers. It’s shocking that such misconduct even takes place, particularly as end-clients pay for workers holiday and are totally unaware that their money has been redirected into the profiteering pockets of dodgy providers.
But let’s not forget about all those who have missed out on vital income, and now have the opportunity to claim what is rightfully theirs. No doubt the legal eagles are already circling ready to support high-profile cases.