England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
His Honour Judge McMullen QC
Appeal No: UKEATPA/0767/10/SM

		Royal Courts of Justice Strand, London, WC2A 2LL
		20/10/2011

Lord Justice Rimer :

1. This is a renewed application for permission to appeal in an employment case. The applicant, claimant in the proceedings, is Harriet Agard, a former employee of the respondent, Westminster Kingsway College. The outcome of her claim was that by his reserved judgment (sent to the parties with reasons on 15 April 2010) Employment Judge Pearl, sitting alone at London Central Employment Tribunal ('the ET'), awarded her a redundancy payment of £1,739.04.
2. Miss Agard sought to appeal against that judgment to the Employment Appeal Tribunal ('the EAT'), claiming that the award under-compensated her by £234.29. Underhill J, the President, ruled on the paper sift that her grounds of appeal had no reasonable prospect of success and directed, under rule 3(7) of the Employment Appeal Tribunal Rules 1993, that no further step should be taken on her appeal. Miss Agard exercised her right to argue otherwise under rule 3(10) and her application came before His Honour Judge McMullen QC. Miss Agard had appeared in person before the ET, but this time she was represented by Thomas Roe of counsel, appearing under the ELAAS Scheme. Judge McMullen concluded that, on the facts found by Judge Pearl, the point advanced on her behalf had been resolved against her by a prior decision of the EAT and that her point was not reasonably arguable. Miss Hagard has now sought to appeal the point to the Court of Appeal. On 28 March 2011 Sir Richard Buxton, on the papers, rejected her arguments as raising no real prospect of success. Miss Hagard has renewed her application before me, again appearing in person.
3. The background facts, as found by Judge Pearl in the employment tribunal and set out in his written reasons for his judgment, can be summarised shortly. Miss Hagard had been employed as a careers adviser with the respondent. Her contract provided, so far as material:

'4. Working Hours

Your working week and the pattern of working hours are set out in the appropriate schedule. Your average working week will be 20 hours, 40 weeks per year. …

5. Holidays

5.1 You will be entitled to receive your normal remuneration for all Bank and Public Holidays normally observed in England and Wales and to a further period of holiday in each holiday year (as set out in the appropriate schedule)'

5.2 The timing of all holiday/leave is subject to the agreement of your line manager taking into account the impact on services.

5.3 You may sometimes be required to work on statutory Bank and public Holidays (other than those at Christmas, New Year and Easter), in which case you will be given time off in lieu

5.4 In the holiday year in which your employment commences or terminates, your holiday entitlement will accrue on a pro-rata basis for each complete month of service. If, on the termination of your employment, you have exceeded your accrued holiday entitlement the Corporation will be entitled to deduct a sum equivalent to salary for the period in excess from any sums due to you, including payments of salary. If on the other hand you have any unused holiday entitlement, the Corporation may require you to take it during your notice period or will alternatively pay the appropriate sum in lieu thereof.

5.5 In general, holiday entitlement from one holiday year cannot be taken in subsequent holiday years. However, you may, with the agreement of your line manager, carry over up to five days holiday entitlement. Failure to take holiday entitlement in the appropriate holiday year, other than in the circumstances described above, will lead to forfeiture of any accrued holiday not taken without any right to payment in lieu thereof.'

4. Clause 3 of an appendix, in referring to annual leave, provided that:

'Annual leave entitlement for a full-time employee is 30 days inclusive of 3 college closure days. These entitlements will be calculated on a proportional basis for part-time staff. …'

5. Miss Hagard was dismissed for redundancy in November 2008. The sole issue before the ET was the correct method of calculating a week's pay for the purpose of the redundancy payment that the respondent was obliged to make. The applicable statutory provision was section 221 of the Employment Rights Act 1996. Judge Pearl recorded in paragraph 2 that the parties had agreed the basic facts. They included that Miss Hagard worked 40 weeks a year, during term time, and was not permitted to take any holiday during term time. Her total annual salary was £13,155.39. The difference between the parties was whether, in order to ascertain the relevant 'week's pay', that gross salary had to be divided by 45.3884 (the respondent's denominator, which for brevity, and like Judge McMullen, I will call 45) or 40 (Miss Hagard's denominator). They respectively produced figures of £289.84 and £328.88. It was agreed that, whatever the right figure, the multiplier then to be applied to it was six, which produced either £1,739.04 or £1,973.33, accounting for the disputed difference of £234.29. Miss Agard's denominator, of 40, was the number of weeks she actually worked. The respondent's denominator of 45 was arrived at by adding to the 40-week figure her holiday entitlement of 5 weeks, during which she was also paid. Judge Pearl recorded in paragraph 10 how, at the outset of the hearing, the respondent had abandoned its original assertion that the applicable denominator was 52.
6. Judge Pearl explained in paragraphs 7 and 8 of his judgment how Miss Haggard's monthly payslips showed that her pay was for both the 40 weeks she actually worked and the period of holiday entitlement, taken out of term time, for which she was also entitled to be paid. She was paid monthly, twelve times a year, and her payslips showed that her gross pay included items under two headings: basic salary and 'TTO holiday', TTO meaning 'term time only'. Judge Pearl explained how her holiday entitlement 'as a 40 week worker' was calculated and how it produced an entitlement of an additional 5 weeks a year, thus taking the total period of her annual employment for which she received pay to 45 weeks. The respondent had explained to Miss Agard in its letter of 6 April 2005 that 'your annual leave as previously stated is included in your salary and as I now understand this is shown separately on your pay slips'.
7. Judge Pearl held that the decision of the EAT in Gilbert, North and Bellwood v. Barnsley MBC [2002] UKEAT/674/00 (the judgment was delivered by Wall J, as he then was) showed that the applicable denominator was the number of weeks for which the employee is paid, including weeks of paid holiday entitlement. Gilbert was a case in which the three appellant employees were each engaged for a limited number of weeks during the year, including their holiday entitlement. Taking Mr Gilbert's case, he was paid for 44 weeks a year, of which 38 weeks were those in which he was required to work. The issue was whether, as the ET had held, 'a week's pay' fell to be calculated by dividing the annual salary payable monthly to the employees by 52; or whether, again taking Mr Gilbert's case, it fell to be divided by 44. The EAT allowed the employees' appeal. I shall cite paragraph 39 of Gilbert:

'Although the contracts of employment in this case are agreed to be annual contracts, we cannot lose sight of the reality, which seems to us to be at the heart of each of these contracts, namely that the Appellants were paid to work for a total of 43 or 44 weeks a year (including holiday periods) and that none of the Appellants was required to work, did work, or were paid to work in the remaining 8/9 weeks of the year. Mr Gilbert's contract of employment says in terms that he is "employed in a term-time only capacity for 37 hours a week". The contract goes on to make it clear that he was paid for 44 weeks a year, and that the actual working year is 38 weeks and 2 days, with the balance of 5 weeks and 3 days being a pro rata payment of annual and public holidays applicable to full time staff. In this context, it is difficult to regard the manner of payment "in twelve equal instalments" as being other than an administrative convenience, and we cannot give it the weight which Mr Cavanagh's submissions require it to be given.'

8. Whilst Miss Agard's contract was not as explicit as Mr Gilbert's, Judge Pearl held, in paragraph 17, that Gilbert provided the answer in her case as well. It showed that '[i]t is the weeks in the year they [the Gilbert employees] worked together with the additional weeks in the year for which they were paid, in order to satisfy their holiday entitlement, that are relevant', adding that it obliged him to find that the correct denominator in Miss Agard's case was 45. That was because the facts showed that she was required actually to work a full 40 weeks but was also paid for an additional five weeks holiday. Judge Pearl added:

'The Claimant argues that she was only obliged to work 40 weeks in the year and that that is evident in her contract and that this is the figure that should be employed. Her argument is attractive. However, her contract is wholly consistent with the contracts in Gilbert. The way in which the contract was operated establishes that precisely the same mechanism was used in her case. Any argument in her favour based upon a difference of wording in the contractual provisions is, to my mind, without any substance. The effect of the clauses I have cited [I have also cited them] and the actual method of payment makes her case indistinguishable. Therefore, I hold that I am bound by authority to find that the revised method of calculation set out by the Respondent is correct. I am not at liberty to determine the matter afresh, for example by finding that the higher figure of 52 should be used, as was submitted by the local authority in Gilbert. Equally, the Claimant's argument appears to attach itself to one particular reading of the statutory language, but Gilbert lends no support to the same. …'.

9. So Judge Pearl held 45 to be the right denominator, not 40. Underhill J, the President of the EAT, on the paper sift, said that that was 'unarguably right'. Judge McMullen, on the rule 3(10) application, agreed. He said that the only argument advanced on Miss Agard's behalf was that she was entitled at the end of the 40-week period to regard herself as unemployed, so that the relevant denominator was 40. He rejected that as wrong and inconsistent with Gilbert. Judge McMullen cited paragraphs 39 and 43 of Gilbert. In dealing on the papers with Miss Agard's application for permission to appeal to the Court of Appeal, Sir Richard Buxton regarded the decisions below as right.
10. Miss Agard persisted before me in asserting that 40 is the relevant denominator. She said that that was the number of weeks she was actually required to work and that she was not entitled to any paid holiday in addition. Therefore 40 was the only relevant figure and it was the appropriate denominator. The essence of her submission was that Judge Pearl was simply wrong not to find the facts accordingly.
11. There are fundamental difficulties in the way of that argument. The first, which will be very familiar to employment lawyers but which may not be familiar to Miss Agard, is that no appeal lay to the EAT against the ET's findings of fact. The only basis upon which Miss Agard could hope to appeal to the EAT was that the ET made an error of law: see section 21 of the Employment Rights Act 1996. Of course, it will be an error of law for an ET to make a finding of fact for which there was no evidence; or to make a finding of fact which is perverse in the sense that no reasonable tribunal could have made such a finding. Whilst, however, Miss Agard plainly disagrees with Judge Pearl's finding that she was being paid for 45 weeks per year (including five weeks of holiday entitlement) rather than just 40 weeks per year for work (and not including any holiday entitlement), there is obviously no basis for a conclusion that his finding was unsupported by evidence or was perverse. On the contrary, it was solidly supported by the analysis of Miss Agard's payslips in which Judge Pearl engaged, which showed that she was being paid each month for the 40 weeks she worked and for the five weeks of holiday entitlement; and her entitlement to holiday leave was recognised in clause 5 of the terms of her contract. Whilst I recognise, as Miss Agard emphasises, that her contract does not spell out expressly that such entitlement was in addition to the weeks she was required to work (unlike, therefore, Mr Gilbert's contract in Gilbert), this was in fact, so Judge Pearl found, how she was being paid. Moreover, as she was required to work the full 40 weeks, if the respondent had not included holiday pay for an additional five weeks of holiday entitlement, it would have been in breach of the Working Time Regulations. One imagines that, had that happened, Miss Agard would have been quick to complain that she was being underpaid. As it is, she has apparently readily accepted her pay for five weeks holiday in addition to pay for 40 weeks work, but persists in denying that her contract was for other than 40 weeks work. That stance is perhaps somewhat inconsistent.
12. In short, Miss Agard's difficulty is that she is fixed with a rational and understandable finding of fact by Judge Pearl as to the way her contract worked and she was paid, being a finding that it was not open to her to challenge in the EAT and is not open to her to challenge in the Court of Appeal either. Once that finding of fact was made, her case was not relevantly distinguishable from Gilbert; and Gilbert shows that the ascertainment of the applicable denominator requires the calculation of the number of weeks for which she was paid, which necessarily includes the weeks of paid holiday.
13. Miss Agard also says that she was not allowed to take any holiday. But she was. She was employed to work for 40 weeks a year but had 12 other weeks in which she could take the holiday to which she was entitled. She was simply not allowed to take it during term time. Miss Agard wishes now also to argue that she has been discriminated against as a part-time worker and, as I follow it, that the respondent has unlawfully made compensatory payments to her in lieu of her minimum holiday entitlement. I do not understand the supposed basis of the former point, but it was not argued in either tribunal below and so there is no justification for allowing it to be argued in this court. The latter point is simply wrong on the facts.
14. In my judgment Miss Agard's proposed appeal is one that has no real prospect of success. I consider that Judge Pearl, Underhill J, Judge McMullen and Sir Richard Buxton were all correct in their assessment that there is no substance to her argument. I would therefore refuse permission to appeal. I add that her wish to argue the case in the Court of Appeal with a view to recovering an additional £234.29 is a surprising one. I do not question that such money is important to her and she impressed upon me how important it is. But if permission were to be given, and the appeal is resisted by the respondent, as is the likelihood, and fails, Ms Agard would not only not recover the £234.29, she would be likely to face being ordered to pay costs to the respondent, probably running to thousands of pounds. That is because costs in the Court of Appeal normally follow the event. A wish on Miss Hagard's part to pursue an appeal appears, if I may respectfully say so, to be seriously ill-judged. I explained this to her at the hearing and I am not sure that she had previously understood the financial risk that the pursuit of her proposed appeal would create. I make clear, however, that I am not refusing permission to appeal in order to save Miss Agard from that risk, although had I been disposed to give permission I would have hoped that she would have recognised the risk involved in pursuing the appeal and re-considered the wisdom of doing so. I am refusing permission because I do not regard an appeal as having any prospect of success.
15. I refuse permission to appeal.