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Holiday pay break periods confirmed by Employment Appeal Tribunal


In the widely reported case of Bear Scotland v Fulton, the Employment Appeal Tribunal (EAT) held that a claim for unlawful deductions from wages can only be brought in circumstances where there are less than three months between each unlawful deduction. If the time period between unlawful deductions is longer than three months, that earlier element of the claim will be treated as time barred.

The EAT remitted Bear Scotland back to the Employment Tribunal for it to apply the ruling to the appropriate facts. The effect of the EAT decision was that the Tribunal treated as time barred all claims and part claims where the time elapsed between unlawful deductions was more than three months.

As a result, Bear Scotland was again appealed to the EAT. The Claimants argued that the Tribunal was wrong to treat the EAT’s decision as binding. The Claimants’ argument centred around the passages in the EAT’s judgment in that it may have been wrongly decided or in the alternative, that the decision was binding but the application of it was to create a strong presumption, rather than binding rule.

The EAT considered the circumstances in which it could depart from a previous decision of the EAT, namely:

  1. that no relevant legislation had been considered;
  2. where there are two or more inconsistent decisions of the EAT or that of another Court on the same point;
  3. where the decision is manifestly wrong; or
  4. other exceptional circumstances.

The EAT did not consider that any of the above exceptions arose in this case. The EAT went on to clarify that ‘departure from the norm of following earlier decisions is not permissible where the earlier decision is in the same case as that in which the departure is sought’.

The EAT held there was no error in law in the Tribunal’s decision and treatment of the EAT’s original decision as binding. The appeal therefore failed.

Employers who have not already done so may wish to deploy pay systems that use this three month break rule to reduce the risk of deductions.

If you would like to discuss any issues raised in this article, we have specific employment law expertise in advising in this area. For further advice, please contact Joan Pettingill on joan.pettingill@luptonfawcett.law or 0114 228 3252 or any member of the Employment Team on emp@luptonfawcett.law.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.


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