HOLIDAY PAY

Sanderson and another v Exel Management Services Ltd

EAT: Silber J, Ms K Bilgan and Mr G Lewis: 15 June 2006

The claimants were employed on a standard hours contract, which provided for a basic 40-hour week after which they received enhanced pay. The hours for which they were paid did not depend on the actual hours worked but were based on notional hours calculated according to a formula whereby certain tasks were deemed to take certain periods of time; so that their remuneration varied according to the tasks allotted to them. Holiday pay was paid at a fixed daily rate based on the notional hours. An employment tribunal dismissed complaints by the claimants that their holiday pay entitlement ought to have been calculated to reflect their actual pay, holding that, for the purpose of calculating "a week's pay" in order to determine the holiday pay to which they were entitled under regulation 16(1) of the Working Time Regulations 1998, the claimants had "normal working hours", as defined by section 234 of the Employment Rights Act 1996, and that, accordingly, in accordance with sections 221–223, the employers had correctly calculated the amount of holiday pay on the basis of the agreed fixed daily rate.

The claimants appealed.

The Employment Appeal Tribunal held:
The calculation of a "week's pay" for the purposes of regulation 16(1) of the Working Time Regulations 1998 differed according to whether or not the employee had "normal working hours". Whether or not the claimants had normal working hours fell to be determined under section 234(1) of the Employment Rights Act 1996, whereby an employee had "normal working hours" where he was employed for "a fixed number of hours" in a week. "Fixed" hours meant a "definite" number of hours and not a notional number of hours even if it was a genuine pre-estimate. Accordingly, the claimants were not employed for "a fixed number of hours in a week" and did not have "normal working hours" for the purposes of calculating a week's pay under regulation 16(1).

The appeal was allowed.

Appearances: Peter Edwards (Rowley Ashworth, Leeds) for the claimants; Fergus McCombie (Solicitor, Exel plc) for the employers.