| 8.9°C Belfast

Employers 'face bills running into of tens of millions' after judgement on PSNI holiday pay



John Simpson

John Simpson

Kevin Scott / Presseye

Antoinette McMillen

Antoinette McMillen

John Simpson

Northern Ireland employers from MOT centres to private companies could face bills of tens of millions of pounds for underpaying workers after a landmark legal decision on holiday wages.

One trade union said it had already lodged tribunal claims on behalf of more than 1,000 civil servants.

It comes after the Court of Appeal ruled that police holiday pay should have taken overtime and allowances into account.

As a result, the PSNI faces a bill of £40m in claims from staff.

The Department of Finance, which sets pay policy for all public sector bodies, said it was considering how the ruling would affect other workers.

"The department is in early discussions with the unions about backdated holiday pay," it added.

"These discussions are at an early stage and it is premature to comment or seek to put a cost to this."

But economist John Simpson said the ruling by the Court of Appeal had reversed employment law practice.

"The court findings which extended the right to holiday pay, enhanced by the previous impact of overtime, are counter-intuitive for many employers," he said.

"It reverses what has been custom and practice for many employment contracts.

"The legal determination for those employees who may be affected will be a welcome pay enhancement but, being unexpected, will have serious budgeting consequences for employing authorities.

"The decision is now made and sets the precedent for eligible employees."

He added the ruling could also have a downside for staff.

"It sets the scene to make employment practices less flexible and adds to the administrative cost of employees," Mr Simpson said.

"The ultimate cost may be many millions of pounds, as the PSNI has shown.

"The law has now been clarified, but that does not mean that the law is sensible and practical."

The ruling means that the calculation of holiday pay must reflect overtime as well as allowances which employees might receive, such as shift allowances.

Antoinette McMillen, of public sector trade union Nipsa, said her organisation had lodged claims for more than 1,000 public sector workers who believe they have been short-changed.

She said: "No worker should be blamed and it's something they're entitled to."

Law firm Edwards & Co represented 3,500 members of the Police Federation for Northern in the proceedings (see opinion).

John McShane, an employment solicitor at MTB Solicitors who represented officers and civilian workers, said some employers may escape additional costs as they may already have addressed the issue after a UK ruling on holiday pay in 2014.

He said the Court of Appeal had introduced a "divisor" element which meant that holiday pay should be calculated on the basis of the number of working days in a year, instead of the total number of days in the year. That could give rise to larger sums of holiday pay.

Mr McShane said that while many employers will have made changes to the payment of holiday pay, "the Court of Appeal decision means the door is still ajar if employers have adopted the industry standard of 365 days, instead of days worked".

Ms McMillen said the decision of the court was "a big story for every worker".

"It all stems from the 1998 Working Time Regulations, which said workers shouldn't be deterred from taking their holidays because they can't afford to do so," she said.

"Holidays are crucial as they are put in place to ensure you have proper rest breaks.

"We have now lodged claims for well over 1,000 Nipsa members and it's going up every day.

"Our phones have been inundated and I'd say that's the case for other trade unions."

Staff who are paid allowances of different kinds could be eligible, she said, including shift workers who would be paid a shift allowance, or MOT workers who might be paid an irregular hours allowance. Meal allowances are not included.

"Anyone who gets an allowance or who gets overtime could be eligible, so if you've been asked to do overtime, it could be you," Ms McMillen said.

Please log in or register with belfasttelegraph.co.uk for free access to this article.

Already have an account?

Belfast Telegraph