PAID ANNUAL LEAVE

British Airways plc v Noble and another: [2006] EWCA Civ 537

CA: Mummery, Scott Baker LJJ and Sir Charles Mantell: 9 May 2006

The claimants brought complaints, in specimen cases, alleging that they were underpaid in respect of their four-week statutory period of holiday, because the employer's method of calculating shift payments produced a figure inconsistent with regulation 16 of the Working Time Regulations 1998 and section 222 of the Employment Rights Act 1996. The claimants worked a variety of shifts on a six-monthly roster and, in addition to their basic pay, received a sum for shift work which varied depending on the shift worked. Such arrangements had been negotiated in collective agreements and incorporated in employees' contracts of employment. Calculation of shift pay involved taking the appropriate weekly figure for the relevant shift, multiplying it by 48, being the number of weeks in a working year, and dividing by 52, resulting in a weekly figure which was paid for each week covered by the roster whether the employee worked or was on holiday that particular week. The employment tribunal found that the employer had failed to pay the claimants within the terms of regulation 16 at the rate of "a week's pay in respect of" their annual holiday weeks. An appeal by the employer was dismissed by the Employment Appeal Tribunal on the basis that the application of the 48/52 multiplier resulted in an underpayment in respect of the shift element in holiday pay in breach of regulation 16.

The employer appealed.

The Court of Appeal held:
The use of the multiplier, which resulted in the payments for shift work in 48 weeks being spread over the 52 weeks of the year, was part of the formula for calculating shift pay contained in the collective agreements and incorporated into employees' contracts of employment and did not involve the employer, in calculating "a week's pay", misapplying the statutory provisions or the collective agreements. In paying employees the same amount for shift pay both when they were at work and when they were on holiday, the employer had complied with the requirements of the Working Time Regulations 1998 and with the policy of the legislation whereby employees should be encouraged to take their holiday entitlement.

The appeal was allowed.

Appearances: Christopher Jeans QC and David Craig (Baker & McKenzie LLP) for the employer; Andrew Hogarth QC(O H Parsons & Partners) for the claimants.