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Appeal No. UKEAT/0014/10/LA

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 18 August 2010

Before

THE HONOURABLE MRS JUSTICE SLADE

MRS A GALLICO

MR H SINGH

MR K CROSSLAND (APPELLANT)

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CORPS OF COMMISSIONAIRES MANAGEMENT LTD (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant
MR KEITH CROSSLAND (The Appellant in Person)

For the Respondent
No appearance or representation by or on behalf of the Respondent

WORKING TIME REGULATIONS – Holiday pay

CONTRACT OF EMPLOYMENT – Sick pay and holiday pay

The employee was entitled under his contract to be paid for leave taken on the basis of his ‘average’ working hours. In context this was basic hours plus overtime hours.

The Employment Appeal Tribunal is bound by the judgment of the Court of Appeal in Bamsey v Alban [2004] EWCA Civ 359 which relied on Employment Rights Act 1996 to hold that the normal working hours basis for determining paid leave entitlement under the Working Time Regulations 1998 (‘WTR’) was contractual hours and not contractual hours plus overtime hours.

The appeal from dismissal of the claim for the difference in pay for leave taken between basic hours and basic and average overtime hours succeeded under the Claimant’s contract and not under the WTR. The Claimant worked and was paid for two days on which he was due to take leave. He was entitled to those two days leave under the WTR. On termination of his employment he was entitled under the WTR regulation 3(9)(b) to payment in lieu of those two days. List Design Group Limited v Douglas and others EAT/0966/00 considered.

1. Mr Crossland appeals from the judgment of an Employment Judge entered in the register on 4 September 2009, determining his claim for payment in lieu of leave due on the termination of his employment.

1. The Employment Judge made such an award in respect of a period of the holiday year when Mr Crossland had been employed by a transferor of his then employer but rejected his claim that his entitlement to payment in lieu of leave due should be based on the average of his hours worked rather than his contracted hours. Further the Employment Judge rejected his claim of breach of the Working Time Regulations 1998 (‘WTR’) in that he should have been allowed two days leave when he had in fact worked on those days in August 2008. The employers had treated those two days as holiday taken in making its calculation on termination of his employment of any sums due to him.

1. The facts briefly stated are as follows. Mr Crossland, having obtained a 1st Class degree in law, was studying on the Bar Vocational course at the relevant time. He worked as a security guard for the employers. His continuous employment had started with the transferor on 3 November 2005. On 1 July 2008 he became employed by the Respondent. His employment came to an end on 2 February 2009.

1. The contract of employment between Mr Crossland and the Respondent provided in material part as follows. Clause 10.1 reads:

“10.1 Shift employee (Ignore if you are a Non-shift employee)

Your employment is Part time and based on normal working hours of 24.00 per week to be worked as required by the Company on any days (including weekends and Bank/Public Holidays) including night shifts as required, according to a shift pattern provided to you under separate cover.

You may be required to work additional shifts to make up your full contractual hours within a rolling 12 month period.”

Clause 11.1 reads:

“Overtime/additional hours based on an hourly rate of £6.10 are payable ('the Basic Overtime Rate') as follows:

Overtime (applicable to this contract)

Overtime, when requested by the Customer, will be paid at [1.00] x the Basic Overtime Rate for all hours excepting Public Holidays which will be paid at [2.00] x the Basic Overtime Rate.

Call Out (not applicable to this contract)

If you are called out to return to work outside your normal contracted day/shift you will be paid a minimum of [ ] hours at the Basic Overtime Rate. When [ ] hours minimum pay is exceeded the payment will be as incurred.

Cover outside of normal contract (applicable to this contract)

Additional complete shifts outside your normal contract shift pattern will be paid at the Basic Overtime Rate only excepting Public Holidays which are paid at 2.00 x the Basic Overtime Rate.”

Clause 12.1 reads:

“The Corps' holiday year runs from 1st April to 31st March. Your paid holiday entitlement is four x your average working week per holiday year (A) (pro-rated in the year of joining and leaving) plus 8 bank/public holidays (see clause 12.3 below) which includes your statutory entitlement under the Working Time Regulations 1998 as amended in October 2007. You will

receive your salary as normal during any period of paid holiday entitlement. If you work shifts then your holiday entitlement will be calculated in shifts not days.”

Clause 12.7 reads:

“At the termination of your employment if you have outstanding holiday entitlement you will normally be required to take that leave during any period of notice given to or by you. If on the termination of your employment you still have outstanding holiday entitlement, you will be paid for the amount of holiday entitlement accrued but not taken calculated according to the formula set out in Clause 12.9 below.”

Clause 12.9 reads:

“On leaving The Corps, your accrued holiday entitlement can be calculated according to the formula (A + 12 *B) - C where A is the annual holiday entitlement, B is the number of months worked and C is the holiday you have already taken.”

1. The 24 hours which are referred to in the contract were worked as to 12 hours on a Saturday and 12 hours on a Sunday. However Mr Crossland contended and his pay showed that he worked considerably more hours. He was paid at the rate of £6.10p per hour. It is recorded in paragraph 10 of the judgment of the Employment Judge that the average number of hours worked each week in the 10 months of the holiday year leading up to the termination of Mr Crossland's employment was 45.875 hours per week.

1. Mr Crossland took three days holiday during the holiday year leading up to the termination of his employment. He was due to take an additional two days in August 2008 but in fact worked for the Respondent on those days at another site away from his usual site of work. The Employment Judge found that he was paid for those two days and in addition he was paid overtime for actually working on those days.

1. On termination of his employment the employers did not make payment in respect of days accrued during the period of the Claimant's employment with the transferor. The Employment Judge made an award of £219.60 in favour of the Claimant pursuant to the WTR in lieu of annual holiday leave not taken. In paragraph 22 of the judgment this award was expressed to be for three days at 12 hours per day. The Employment Judge dismissed the pro rata claim in respect of leave for the difference between 12 hours contracted hours and the 45.875 hours actually worked per week. The Employment Judge also rejected the claim in respect of the two days holiday not taken in August 2008.

1. At paragraph 18 the Employment Judge held in respect of the construction of Mr Crossland's contract:

“It is correct that average working week is not defined in this contract as such but I have to read this clause not in isolation but in relation to the other clauses which precede it and the clauses that go after it. I have to make sense of what is meant by that paragraph and you have to read paragraph 10 together with paragraph 12 in order to determine what the formula is in the case of the Claimant. In my judgment because he had normal working hours of 24 it means 24 and not the 45 hours that the Claimant says is the calculation.”

At paragraph 21 the Employment Judge held:

“In order to work out what leave an employee is entitled to, you have to construe Regulations 13 and 13(A). Regulation 13 says four weeks, 13(A) refers to point eight of the week. Hence the figure of 4.8. 4.8 x 2 gives 9.6 days which is holiday entitlement that the Claimant had. However, for the ten month period that the Claimant worked that would equate to some eight days.”

At paragraph 22 the Employment Judge held in respect of two days annual leave which was to be taken in August 2008, but in fact was worked:

“I cannot and do not read the Regulations as saying that the word 'take' means actually not being at a place of work for that period of time and therefore one must disregard it in assessing the amount payable for those two days. Therefore it is five days that he has taken out of the leave year and so the Claimant is entitled to three days further payment."

Accordingly the Employment Judge arrived at the figure £2,019.60 which was awarded pro rata by reason of Mr Crossland’s transfer of employment during the holiday period in the year from April to 1 July 2008.

1. There are three grounds of appeal. It is contended by Mr Crossland that the Employment Judge erred in that first, under the contract, he was entitled to be paid in respect of holiday based on the average number of weekly hours he worked: 45.87. Second, pursuant to the WTR he was entitled to be paid for holiday based on average hours worked per week. Third, in accordance with the WTR he was entitled to compensation for an additional two days leave as the two days that he was due to take as leave in August 2008 were not taken in accordance with the WTR it was not permissible for the employers to pay in lieu of grant of leave.

1. The relevant provisions of the WTR are set out below:

“13. - (1) Subject to paragraphs (5) and (7), a worker is entitled in each leave year to a period of leave determined in accordance with paragraph (2).

(2) The period of leave to which a worker is entitled under paragraph (1) is -

(a) in any leave year beginning on or before 23rd November 1998, three weeks;

(b) in any leave year beginning after 23rd November 1998 but before 23rd November 1999, three weeks and a proportion of a fourth week equivalent to the proportion of the year beginning on 23rd November 1998 which has elapsed at the start of that leave year; and

...

(5) Where the date on which a worker's employment begins is later than the date on which (by virtue of a relevant agreement) his first leave year begins, the leave to which he is entitled in that leave year is a proportion of the period applicable under paragraph (2) equal to the proportion of that leave year remaining on the date on which his employment begins.

13A.—(1) Subject to regulation 25C and paragraphs (3) and (5), a worker is entitled in each leave year to a period of additional leave determined in accordance with paragraph (2).

(2) The period of additional leave to which a worker is entitled under paragraph (1) is—

(a) in any leave year beginning on or after 1st October 2007 but before 1st April 2008, 0.8 weeks;

(b) in any leave year beginning before 1st October 2007, a proportion of 0.8 weeks equivalent to the proportion of the year beginning on 1st October 2007 which would have elapsed at the end of that leave year;

(c) in any leave year beginning on 1st April 2008, 0.8 weeks;

(d) in any leave year beginning after 1st April 2008 but before 1st April 2009, 0.8 weeks and a proportion of another 0.8 weeks equivalent to the proportion of the year beginning on 1st April 2009 which would have elapsed at the end of that leave year;

(e) in any leave year beginning on or after 1st April 2009, 1.6 weeks.

(3) The aggregate entitlement provided for in paragraph (2) and regulation 13(1) is subject to a maximum of 28 days.

(4) A worker’s leave year begins for the purposes of this regulation on the same date as the worker’s leave year begins for the purposes of regulation 13.

(5) Where the date on which a worker’s employment begins is later than the date on which his first leave year begins, the additional leave to which he is entitled in that leave year is a proportion of the period applicable under paragraph (2) equal to the proportion of that leave year remaining on the date on which his employment begins.

(6) Leave to which a worker is entitled under this regulation may be taken in instalments, but it may not be replaced by a payment in lieu except where—

(a) the worker’s employment is terminated; or.

(b) the leave is an entitlement that arises under paragraph (2)(a), (b) or (c); or.

(c) the leave is an entitlement to 0.8 weeks that arises under paragraph (2)(d) in respect of that part of the leave year which would have elapsed before 1st April 2009.

(7) A relevant agreement may provide for any leave to which a worker is entitled under this regulation to be carried forward into the leave year immediately following the leave year in respect of which it is due."

…

14. - (1) This regulation applies where -

(a) a worker's employment is terminated during the course of his leave year, and

(b) on the date on which the termination takes effect ("the termination date"), the proportion he has taken of the leave to which he is entitled in the leave year under regulation 13(1) differs from the proportion of the leave year which has expired.

(2) Where the proportion of leave taken by the worker is less than the proportion of the leave year which has expired, his employer shall make him a payment in lieu of leave in accordance with paragraph (3).

(3) The payment due under paragraph (2) shall be -

(a) such sum as may be provided for for the purposes of this regulation in a relevant agreement, or

(b) where there are no provisions of a relevant agreement which apply, a sum equal to the amount that would be due to the worker under regulation 16 in respect of a period of leave determined according to the formula -

…

16. - (1) A worker is entitled to be paid in respect of any period of annual leave to which he is entitled under regulation 13, at the rate of a week's pay in respect of each week of leave.

(2) Sections 221 to 224 of the 1996 Act shall apply for the purpose of determining the amount of a week's pay for the purposes of this regulation, subject to the modifications set out in paragraph (3).

(3) The provisions referred to in paragraph (2) shall apply -

(a) as if references to the employee were references to the worker;

(b) as if references to the employee's contract of employment were references to the worker's contract;

(c) as if the calculation date were the first day of the period of leave in question; and

(d) as if the references to sections 227 and 228 did not apply.

(4) A right to payment under paragraph (1) does not affect any right of a worker to remuneration under his contract ('contractual remuneration').

(5) Any contractual remuneration paid to a worker in respect of a period of leave goes towards discharging any liability of the employer to make payments under this regulation in respect of that period; and, conversely, any payment of remuneration under this regulation in respect of a period goes towards discharging any liability of the employer to pay contractual remuneration in respect of that period.”

1. Turning to the first ground of appeal, the contract. The contract recognised the difference between normal and average. One sees from clause 10 of the contract that the term "normal" is used when the contract provides that the Claimant, Mr Crossland's, normal working hours were 24 per week.

1. The contract further made provision by clause 11, for additional hours/overtime hours and the rates of pay for such hours.

1. Following immediately after the clause dealing with the additional hours/overtime hours, is clause 12 which deals with holiday entitlement. Clause 12 provides that the employee’s paid holiday entitlement is “four times your average working week per holiday year” pro rated in the year of joining and leaving.

1. The Employment Judge prayed in aid clause 10 in support of reading “average” as "normal" in clause 12. With respect to the Employment Judge, in our judgment, this reading fails to recognise the difference in language in the two clauses. It is to be noted that the use of the word "average" in clause 12 follows the provision in clause 11 for additional hours. The contract therefore in terms recognised that in addition to normal working hours, additional/overtime hours could be worked. The term average used after clauses 10 and 11 must be given some meaning. Accordingly, we hold that the term "average" means what it says in the ordinary understanding of that term, which is an average number of hours actually worked in a week, over the material period. In our judgment, that term is not to be read as “normal”, which is used in a different provision in the contract and has a different meaning. Accordingly we hold that the Employment Judge erred in determining that the average working week was one of 24 hours. On the evidence before the Employment Judge it was one of 45.785 hours.

1. It is not strictly necessary for us to determine the ground of appeal based on the WTR. Out of respect for Mr Crossland's arguments on this point, we mention them but briefly. Mr Crossland initially developed a detailed argument which at heart depended upon a challenge to the correctness of the judgment of the Court of Appeal in Bamsey v Albon [2004] EWCA Civ 359. In that case the Court of Appeal dismissed an appeal by a Claimant who contended that he was entitled to receive pay for each week of his annual leave calculated on the basis of overtime worked in addition to basic hours of work. The Court of Appeal held that the calculation of the payment for leave should be determined having regard to section 234 of the Employment Rights Act 1996. This led to the result that the normal working hours basis for determination of paid leave entitlement was contractual hours and not contractual hours plus overtime hours. Section 234 of the Employment Rights Act reads:

“(1) Where an employee is entitled to overtime pay when employed for more than a fixed number of hours in a week or other period, there are for the purposes of this Act normal working hours in his case.

(2) Subject to subsection (3), the normal working hours in such a case are the fixed number of hours.

(3) Where in such a case—

(a) the contract of employment fixes the number, or minimum number, of hours of employment in a week or other period (whether or not it also provides for the reduction of that number or minimum in certain circumstances), and.

(b) that number or minimum number of hours exceeds the number of hours without overtime,

the normal working hours are that number or minimum number of hours (and not the number of hours without overtime).”

1. Mr Crossland accepts that we are bound by the judgment in the Bamsey case to hold that the WTR regulation 16 means that under the WTR where there are normal contractual hours of work although overtime or additional hours may be worked, paid leave entitlement is calculated by reference to the contractual hours.

1. In our judgment, Bamsey is not distinguishable from Mr Crossland's case and his ground of appeal under the WTR cannot succeed before us. Whether the judgment in Bamsey is open to question or challenge on the basis that Mr Crossland argued the case is not a matter for us.

1. We now turn to the third ground of appeal, namely the claim for an extra two days leave. Mr Crossland contends that pursuant to the WTR, the fact that the employers paid him for working on the two days in August which they counted as annual leave and in respect of which they also gave him holiday pay does not relieve them from the obligation to grant those two days as days of leave. He points to the purpose of the Directive which led to the enactment of the WTR and also relies rightly on regulation 13(9)(b) which provides:

“Leave to which a worker is entitled under this regulation may be taken in instalments, but –

...

(b) It may not be replaced by a payment in lieu except where the worker’s employment is terminated.”

Mr Crossland also relies on the judgment of the Employment Appeal Tribunal in List Design Group Limited v Douglas & Ors EAT/0966/00, in which it was said at paragraph 45:

“In our view Regulation 13(9)(b) is clearly aimed at the vice of an employer of persuading employees not to take the leave to which they are entitled but to take more money instead. That would clearly be against the public policy of doing the best to ensure that employees take proper, refreshing periods of holiday in any given year. In our view the wording of Regulation 16(1) is clear and the provision in 13(9)(b), with the aim to which we have just referred, does not detract from it.”

In our judgment Mr Crossland's argument in this regard is well-founded. The Employment Judge erred in holding that Mr Crossland was not entitled to an additional two days leave or on termination of his employment to payment in relation to those additional two days leave not taken.

1. Regulation 30(5) of the WTR provides:

“(5) Where on a complaint under paragraph (1)(b)[which this is] an employment tribunal finds that an employer has failed to pay a worker in accordance with regulation 14(2) or 16(1), it shall order the employer to pay to the worker the amount which it finds to be due to him.”

Pursuant to the powers of the Employment Tribunals Act 1996 section 35, this Employment Appeal Tribunal "for the purpose of disposing of an appeal may (a) exercise any of the powers or body or officer from whom the appeal was brought." In exercising that power, we make an award for payment to Mr Crossland of the sum which he calculates is due in accordance with our determination of his appeal, which has succeeded on the two bases explained. The total sum arrived at in accordance with that calculation is £699.22p.