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Panning For Gold: Points of Interest Following Landmark EAT Ruling

Carol Davis

This week’s much
anticipated EAT ruling has been met with extensive coverage and excitement
among commentators. (Click
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.

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