HR professionals will be only too familiar with the long-running saga that is holiday pay. The confirmation provided by the Employment Appeal Tribunal (EAT), in the case of Fulton and another v Bear Scotland Ltd, should therefore be welcome news. The EAT has confirmed that a gap of more than three months between non-payments or underpayments of wages breaks a series of deductions for the purpose of bringing an unlawful deduction from wages claim.
A series of deductions requires a “factual and temporal link.” In practice, this means that any consecutive deductions must relate to the same subject matter (the factual link) and occur within a period of three months (the temporal link). If there is no temporal link (i.e. any chain of deductions is broken because there is a gap of more than three months), any factual similarities between deductions become irrelevant. A tribunal will not have jurisdiction over older deductions (which do not form part of an unbroken chain of deductions) unless it can be convinced to exercise its discretion to extend time. There is also a two-year longstop time limit for most deductions from wages claims, including holiday pay.