Holiday pay 3-month break rule overturned

The long-awaited judgement of the Supreme Court has finally been unveiled with the key point being that a gap of 3 or more months between deductions from pay will not automatically break a series of deductions or bring that series to an end. This brings an end to the so-called ‘3-month break rule’.

In terms of holiday pay claims, it means that an employer can no longer seek to avoid claims for backdated holiday pay simply by making a correct payment in an attempt to break the series of non-payments.

The impact of the decision is slightly sweetened by the 2-year backstop, holiday pay claims are limited to recovering 2-years back dated holiday pay dating back from the date on which the employee issues their claim. However, the case of King v Sash Windows remains a word of warning that an employer who fails to grant paid holiday to employees/workers should not be entitled to the benefit of the 2-year backstop.

This is a complex area so NFU Employment Service members should contact the Helpline on 0370 840 0234 for advice on your specific circumstances.