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Issue 106 (December 2005)

In the news
Working time gentlemen please
Working holiday
Sick of holidays?
Personality plus
A shoddy compromise
Tiptoe through the TUPE
Trade secrets

Working holiday

Although the Working Time Regulations (WTR) were introduced in October 1998, they did not become effective in a number of sectors (such as air) until 1 August 2003. These stated, among other things, that workers were entitled to four weeks' paid annual leave.In British Airways plc v Noble and Forde, the employment appeal tribunal (EAT) said that BA could not rely on a 30-yearold formula for calculating shift pay that had the effect of reducing a week's pay.

What were the basic facts?

Under the terms of their contracts, the holiday pay of BA employees was calculated using an agreement reached with the unions many years before the introduction of the regulations.

Clause 16 stated that total shift pay was calculated by multiplying the shift pay for each pattern by an agreed payment.

This was then divided by the number of weeks in that pattern, multiplied by 48 and divided by 52 to produce a weekly payment. This payment was then paid regularly throughout the year.

Mr Noble and Ms Forde argued that the formula did not comply with their entitlement to paid holiday under the WTR, which stated that they were entitled to be paid "at the rate of a week's pay in respect of each week of leave."

The tribunal agreed, saying that the purpose of the agreement (which was perfectly valid at the time) had been to prevent employees from getting shift pay when they were on holiday. As a result, it was in breach of the regulations.

What did the parties argue on appeal?

BA argued that the agreement complied with the regulations, in that it paid the same amount "for the weeks worked and the weeks on which the individual was on holiday." In effect, it said that clause 16 was just a way of calculating a week's pay.

Mr Noble and Ms Forde, pointed out, however, that in order to arrive at the calculation BA had made a deduction by reference to the multiplicand of 48 and the divisor of 52.

They said that in the "rolled-up holiday pay" cases - Marshalls Clay v Caulfield (2004, ICR 1502) and Smith v Morrisroes (2005, ICR 596) - employers had to show that there was enough holiday pay "rolled up" in the enhanced payments that they made to their workers during the weeks that they worked to cover the weeks on holiday. In this case, they said that although employees were paid the same for each week, BA had to show they had not reduced the amount of money they paid.

What did the EAT decide?

And the EAT agreed with them. It said that employers have to show that they have not deducted any money in respect of holiday pay. The same principle applied as in the rolled-up holiday pay cases, in which the employers had to show that they had made a genuine payment in respect of holidays by increasing the amounts paid over the rest of the year.

It said that, in this case, the contractual rate of pay had been arrived at by calculating what was owed to the workers in respect of shift work, but then reducing it using the formula of 48/52.

The EAT said this was contrary to the regulations because "there must be no reduction of payment during the working days in the rest of the year to pay for those 20 days holiday. That is what has occurred here."

However, this only applied to the 20 days' statutory holiday to which the employees were entitled and not the 34 contractual days which most full timers enjoyed. As BA had been entitled to pay the reduced amount for 14 days, it was therefore only in breach of the regulations for six days (20 minus 14).