The Claimant went off sick and was eventually dismissed. On termination the Respondent calculated his accrued holiday on the basis of 1/365th of annual salary for each day’s leave - this clause was in the Claimant's contract of employment. During the course of his employment, as would be expected, he received the equivalent sum for a week of holiday as he would for a week working. However, upon termination, the calculation was made on the basis of the above term and so he was paid less than he would have been had he taken the holiday. The Employment Judge found that the rate of pay that applied to termination was that set out in the contractual term above and that the contractual term was part of a relevant agreement for the purposes of the WTR. On that basis the calculation that had been reached by the Respondent had been correctly calculated. The Claimant appealed and two distinct questions were considered: first, whether there is a default method of calculation for the payment of accrued holiday pay on termination and, secondly, whether an agreement can make provision for a payment that is less favourable to an employee than any default calculation which is established.

The EAT allowed the appeal. A relevant agreement as to the calculation of final holiday within the working time regulations cannot be an agreement which would permit an employer to pay less than that which would be required under the regulations. Regulation 14 provides a method of calculation for the purposes of regulations 13 and 13A for an incomplete leave year. The entitlement to annual leave, and payment, are not modified by regulation 14. The regulation provides a formula of calculation which promotes the right to annual leave and the attendant payment for holiday. The phrase “such sum as may be provided for the purposes of this regulation in a relevant agreement” refers to any agreement that provides a formula which is in keeping with the rights provided for in the regulations. The EAT calculated the amount due to the Claimant as the sums were so small and did not merit being remitted back to the ET.