Backdated holiday pay for civil servants: Alliance's Stephen Farry explains why he decided not to introduce two-year cap on claims

Following a court ruling that could leave the PSNI with a settlement bill for backdated holiday payments to officers and civilian staff of £40 million, concerns have been raised that thousands of similar claims from civil servants could cost the public purse hundreds of millions of pounds.

While a law was enacted in Great Britain that prevented backdated pay claims older than two years, it was not extended to Northern Ireland.

Dr Farry, who was Employment and Learning Minister at the time, has been asked to explain why the same pay claim cap wasn't put in place here, potentially leaving the civil service open to claims dating back up to 20 years.

Explaining his decision, the Alliance Party MLA said there "could have been potential equality implications" and "indications were also given that the two-year cap was potentially illegal." He also confirmed that the matter was not referred to the Executive.

In a statement issued this afternoon, Dr Farry said: "Over the past few days, I have been prioritising talks to restore devolution, while seeking to find the time to review Departmental papers before giving a comprehensive statement on the holiday pay issue.

"I first became aware of the issue in November 2014 on the back of the Bear Scotland judgement, and subsequently the two-year cap introduced in Great Britain via the Deduction of Wages (Limitation) Regulations 2014, which came into effect in early 2015. It is important to note there was a six-month transitionary period to those regulations in which claims could be made under the pre-existing regime.

"Those working in the human resources field across the public and private sector were well aware of the significant Bear Scotland judgement.

"Throughout, my view was that employers should act on the back of that judgement to address any deficiencies in their own pay situation.

"In early 2015, I authorised a write-around of key stakeholders to ascertain views on the introduction of a similar cap in Northern Ireland. There were mixed views on that, with business organisations supportive, but NIPSA, NIC-ICTU and the Law Centre all strongly opposed.

"I met with some key stakeholders to discuss the matter.

"The Committee for Employment and Learning was also briefed regularly on the evolving issue.

"I subsequently requested my officials draft a consultation paper regarding the potential introduction of a cap in Northern Ireland to give me options.

"That draft consultation was prepared in August 2015, but after reflection and further discussions with officials, I ultimately decided not to proceed.

"My reasoning was as follows:

"Any steps that curtail people’s rights or potential rights as employees are not to be undertaken lightly.

"In Great Britain, the two-year cap was rushed through in two weeks.

"That option did not apply in Northern Ireland, and with good reason, for example there could have been potential equality implications which must be explored.

"A potential legislative proposal such as this required a public consultation, followed by consideration of all responses, Executive approval and Committee scrutiny of any decision to act.

"There was also legal advice that unlike in Great Britain, the measure may have needed to be advanced by primary legislation here.

"Indications were also given that the two-year cap was potentially illegal.

"It was unlikely any consultation and subsequent draft legislation would have been cleared by the Executive and then the Assembly. In employment law matters, some political parties were resolute in never acting contrary to the views of the trade union movement.

"At that time, a wider Employment Law Bill had been stalled due to perceived opposition from the trade union movement for many months.

"Even with a fair wind politically, it would have taken three to four months before any legislation would have been passed by the Assembly. That would then be followed by a transitionary period of six months.

"This provides a window of almost a year in which claims could have been lodged with the Employment Tribunal with the full potential liability on backpay. We would have seen an artificial cliff-edge created and a stampede to lodge claims. This would be to the detriment of facilitating the space for employers to address their own liabilities to their employees through negotiated settlements.

"By way of comparison, there was a significant upsurge in tribunal claims in Great Britain within the six-month transitionary period for the cap. A similar if not greater surge could have been anticipated in Northern Ireland.

"For context, tribunal fees as a hurdle to people protecting their rights had been in force in Great Britain for several years at that time. These were declared illegal by the UK Supreme Court in 2017. I had resisted such measures in Northern Ireland. Employment legislation in Great Britain was often rushed and not properly thought through.

"Ultimately, it was my judgement a two-year cap on payments in Northern Ireland was counter-productive."

Dr Farry added: "Crucially, it is important to note the case against the PSNI in Northern Ireland was lodged in November 2015, and indeed could have been lodged earlier if required. Therefore, no cap in Northern Ireland could have been applied in terms of the outworkings of that particular case.

"To clarify some other matters, this matter did not go the Executive. The trigger for Executive referral under the Ministerial Code would have been a decision to proceed with a consultation.

"It is important not to jump to conclusions on the financial implications within Northern Ireland from the PSNI judgement and make extrapolations across the public sector. I understand the Head of the Civil Service and the Department of Finance are exploring all of these issues.

"Furthermore, the PSNI may yet decide appeal the Court of Appeal judgement to the UK Supreme Court."

A spokesperson for The Executive Office said: "A number of issues have been raised on this matter and it is only right that Departments take time to consider all these issues and establish the full facts before responding.”