Recent decision may open the door for UK holiday pay claims going back more than two years

An interesting employment tribunal decision has been handed down in the case of Afshar and others v Addison Lee: https://shorturl.at/Svqn3.

In finding that the Addison Lee drivers were workers and not self-employed, the judge also ruled that the drivers' claims to unpaid wages (holiday pay and national minimum wage) should not be limited to the two year backstop on unlawful deductions claims. That was because the regulations that, in 2015, amended the deductions provisions in the Employment Rights Act 1996 by introducing the two-year backstop (The Deduction from Wages (Limitation) Regulations), are ultra vires and so unlawful.

The Regulations were introduced to reduce the impact of holiday pay claims that could otherwise stretch back several years where there is a 'series of deductions'. They were introduced under the European Communities Act 1972 (ECA), which allowed the UK government to implement secondary legislation in order for the UK to comply with its EU obligations. Under the EU principle of equivalence, rights which arise under EU law cannot be more difficult to enforce than equivalent domestic rights, and so the Regulations applied not only to EU-derived holiday pay rights but to all deductions from wages claims. But this was, in the judge's opinion, an inappropriate use of the ECA, and only new primary legislation could limit the exercise of domestic law rights in this way.

It seems inevitable that this point will be appealed, with the judge accepting that "my conclusion in that regard will be challenged and may be wrong." However, if upheld by the higher courts, the decision could re-ignite holiday pay claims that were thought to have been limited for the last 10 years.