The UK Supreme Court dismissed an appeal made by the Police Service of Northern Ireland (PSNI) in a landmark judgment over holiday pay underpayments.

In the case of Chief Constable of the Police Service of Northern Ireland v Agnew, the Supreme Court ruled that police officers and other employees of the Police Service of Northern Ireland are entitled to bring a claim for a series of underpayments for their holidays. Their holiday pay had not included overtime and certain other allowances.

This decision will only affect employers who currently calculate holiday pay on basic pay only, with existing employees or those who have left within the past three months, which is the time limit for bringing a claim.

According to UK law firm Lewis Silkin, the ruling is likely to cost the Police Service of Northern Ireland £30-40 million as back pay for holiday pay claims and is also likely to have significant implications for employers in Northern Ireland and Great Britain.

The law firm noted that employers in Great Britain, however, are in a better position, because there is a two-year limit on how far back holiday pay claims can go, however there is no such protection in Northern Ireland law and claims could go back further.

Unison, which participated in the case as an ‘Intervener’, said the ruling affected all other types of payment to employees and called it a ‘victory for underpaid workers’, according to The Guardian. Intervening is entry into a lawsuit by a third party into an existing civil case who was not named as an original party but has a personal stake in the outcome.

Unison added that for other payments including statutory sick pay, statutory maternity, paternity and adoption pay, and time off for union duties, the claim can go back to when the underpayment first began.

Shantha David, Unison’s head of legal, said that for years many workers had been treated unfairly but ‘this judgment ensures they will get all the wages they are rightfully owed’.

Jo Moseley, a member of the law firm Irwin Mitchell’s employment team, said, “Today’s ruling is of major significance and has the potential to cost UK businesses millions of pounds.”

Nicholas Le Riche, from the law firm BDB Pitmans, told Reuters, "Organisations in England, Wales and Scotland will be able to rely on the two-year limit on how far back unlawful deduction from wages claim can go, but even so this decision still has the potential to cost UK businesses millions of pounds."