United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR T J KNOWLES (Solicitor and Employee Relations Adviser) Co-operative Employers Association Holyoake House Hanover Street Manchester M60 0AS


 


JUDGE PETER CLARK: The short point arising in this appeal is how accrued holiday pay, paid on termination of employment, should be treated by an Industrial Tribunal when calculating a compensatory award following a finding of unfair dismissal.

In this case Mrs Eglin, the applicant was employed by the respondent employer from 1st November 1980 until her dismissal by reason of redundancy effective summarily on 30th June 1997. On termination of her employment she received the following "package" from the respondent:

(1) statutory redundancy payment of £3,668.60;

(2) pay in lieu of notice totalling £2,201.16; and

(3) six weeks accrued holiday pay; £849.16.

On the hearing of her complaint of unfair dismissal held on 18th December 1997 the Leicester Industrial Tribunal found that the dismissal was unfair and proceeded to calculate compensation. As appears from their extended reasons dated 14th January 1998, the tribunal approached that task in this way, the applicant not having obtained alternative employment in the meantime:

(1) they correctly held that the applicant was not entitled to a basic award, having received the equivalent statutory redundancy payment.

(2) they found that at the date of termination the applicant earned remuneration of £143.57 per week net, taking in account the use of a company vehicle as well as her weekly wage.

(3) they calculated her loss from 1st July to 17th December (past loss) being 24 weeks at the net weekly rate, £3,445.68. From that gross figure the tribunal deducted the sum paid by the respondent in lieu of notice; £2,201.16.

(4) At this stage in the calculation, it was submitted on behalf of the respondent, that the tribunal ought to deduct the sum paid in respect of accrued holiday pay, £849.16. The tribunal declined to do so, expressing their approach in paragraph 13 of the reasons thus:

"13. We were asked by Mr Knowles on behalf of the respondent to deduct also the amount which she received by way of payment for holiday entitlement and Mr Knowles drew our attention to an authority namely Rushton v Harcross [1993] ICR 230. However, we find on pursuing it that that authority simply states that credit must be given for any ex gratia or similar payment made by an employer and does not affect the proposition that no credit is to be given in respect of payments which are made in respect of a contractual obligation. Our finding is that the payment in respect of accrued holiday entitlement falls into that category."

(5) Finally, the tribunal awarded a sum representing 13 weeks net pay in respect of future loss of earnings, and added £200 for loss of statutory rights, arriving at a grand total of £3,110.93.

In this appeal Mr Knowles submits that the tribunal erred in failing to deduct the accrued holiday pay. He contends that holiday pay is a contractual entitlement which accrues with service and represents payment for a future period during which the employee is not required to work. Accordingly, accrued holiday pay paid to an employee on termination must be regarded a remuneration paid for a future period, as is pay in lieu of notice. It should be deducted from the gross calculation of lost remuneration following termination, otherwise the employee has made a double recovery.

We reject that submission. Where there is a contractual entitlement to accrued holiday pay on termination of employment (cf. Morley v Heritage [1993] IRLR 400) that payment represents a past entitlement to holiday not taken by the employee prior to termination. She has in effect worked when she was entitled to take paid holiday prior to termination. Although it is correct to say that but for the termination she would have taken her accrued holiday in the future, that does not in our judgment alter the nature of the termination payment. In these circumstances, in our view, no credit need be set off against the post-termination loss of remuneration in respect of accrued holiday pay. It is not simply a case of contractual entitlement, as the Industrial Tribunal thought, but of payment in lieu for past holiday entitlement not taken. Such payment is no more deductible from the post-termination loss than a payment of salary in arrears at the date of termination.

In these circumstances, there being no authority on the point, we have concluded that there is no arguable point of law which ought to go to a full hearing before this Appeal Tribunal, and accordingly, we shall dismiss the appeal at this stage.