A recent decision confirms that underpayments of holiday pay can be linked by the same erroneous calculation, entitling a worker to claim for underpayments going back two years.
In Deksne v Ambitions Ltd, the Employment Appeal Tribunal (EAT) has confirmed that it is a question of fact whether underpayments of holiday pay form a series of deductions for the purposes of an unlawful deductions from wages claim. In determining whether there is a series of deductions, a tribunal should take into account all relevant circumstances, including the similarities, differences, frequency, size and impact of the deductions, as well as how they came to be made and applied and what linked them together. In particular, a break of three months does not break a series of deductions and neither does a correct and lawful payment.
The Claimant, Ms Deksne, was employed on a part-time basis by a temporary employment agency, Ambitions Ltd. The rules on how to calculate holiday pay for variable hours workers changed in April 2020, after which holiday pay had to be calculated over a 52-week reference period, ignoring any weeks when the worker didn’t work and substituting for earlier weeks. Ambitions failed to calculate Ms Deksne’s holiday pay correctly, by including weeks within the reference period when she did not work, thereby lowering the average pay received and on which her holiday pay was calculated.
A tribunal found that, although Ambitions had miscalculated Ms Deksne’s holiday pay, she could not claim all underpayments, because some did not form a series of deductions and were, therefore, out of time. On this basis, the tribunal struck out the Claimant’s claim for holiday pay deductions for December 2020 and before, noting that, “The Claimant needed to bring the claim sooner or have gaps of less than three months between deductions [for her claims to be in time]”. The EAT disagreed and found that there was a series of underpayments, which had not been broken, despite lengthy intervals between underpayments including one of seven months. In the EAT’s view, all underpayments of holiday pay were based on the same erroneous calculation and, as such, were linked and could form part of a series.
Ms Deksne was entitled to claim all underpayments of holiday pay back to the beginning of the two-year backstop. For unlawful deductions claims brought on or after 1 July 2015, an employment tribunal cannot look back more than two years before the date of the claim.
Sarah Taylor