In this case, the EAT confirmed that, where there is a three month gap between incidents of underpayment/non-payment of holiday pay, claims will be out of time.

The Facts 

Mr Fulton and Mr Baxter brought unlawful deductions from wages claims against Bear Scotland Limited, successfully claiming that overtime payments and other supplemental payments had been wrongly excluded from the calculation of their holiday pay. The employment tribunal found that these payments should have been included in the calculation of holiday pay, and (on appeal) the EAT agreed, finding that non-guaranteed overtime must be taken into account in calculating the minimum four weeks' statutory annual leave required by the Working Time Directive. The case was remitted to the employment tribunal to decide on which of the claims had been made in time. The claimants argued that the EAT's decision, that a three month gap between deductions breaks any series, was not binding. The tribunal rejected their arguments, and found that the majority of their claims were out of time, as the amounts claimed did not, for the most part, amount to an unbroken series of deductions, the underpayments having been interspersed with periods of at least three months during which no deductions occurred.

Mr Fulton and Mr Baxter appealed to the EAT, and the EAT dismissed the appeal.

What does this mean for employers?

This is not a surprising decision, but it is good news for employers. Combined with legislation introducing a two year back stop period for most unlawful deductions from wages claims brought on or after 1 July 2015, this confirms the significant limitation on historical liability for underpaid holiday. It does not, of course, affect the obligation to take non-guaranteed overtime into account in calculating holiday pay.

Fulton and another v Bear Scotland Ltd (No 2) UKEATS/0010/16