This week’s much anticipated EAT ruling has been met with extensive coverage and excitement among commentators. (Click <href=”/judgment-handed-down-in-important-holiday-pay-appeal-655/”>here for more information on the findings or Mr. Justice Langstaff in this widely
reported judgment.)
Here are 3 important points to consider from the decision:
- The decision’s impact on zero-hours contracts. Presently, those on such contracts accrue a right to annual leave if their employment is continuous. This finding makes it likely that there is a corresponding right to holiday pay, to be calculated as their average weekly pay during the course of their employment.
- This development is not limited to overtime. Mr. Justice Langstaff also held travel expenses are to be included in calculating an employee’s remuneration for holiday pay purposes. Similarly, any premium pay (for example pay for working anti-social hours) should also be taken into account where it is ‘intrinsically linked’ to the work the worker is contracted to do. In Lock v British Gas Trading Ltd [2014], it was recently held that commission must also be included. The courts have yet to identify a reason as to why performance-related bonuses or any other non-salaried method of payment under an employment contract should be excluded.
- This is an evolutionary, not radical, change in the law. In British Airways v Williams (2011) C-155/10 it was held that variable components such as bonuses must be included in calculating holiday pay. Albeit this decision relied upon the Civil Aviation (Working Time) Regulations 2004 and corresponding EU law, but the principles applied are indistinguishable.
And here is one myth to quickly dispel:
- Employers will shortly be bankrupted by a large, backdated, bill.
In the judgment, the Employment Appeals Tribunal relied on s.23 Employment Rights Act 1996 to find that a 3-month limitation period will apply if there has been a break of more than three months between successive underpayments. If Mr. Justice Langstaff is right that the EAT’s decision only relates to the 20-day holiday provided for under the European Working Time Directive and not the additional 8-day entitlement provided by the Working Time Regulations and if it is right that Directive holiday is taken first in any holiday year, then it is arguable that the series of deductions
may be broken where an employee has taken Directive holiday followed by Regulation holiday.
