United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE APPELLANT


 


JUDGE WILKIE QC:

1. This is an appeal by Leisure Leagues UK Ltd against a decision of the Employment Tribunal held at Birmingham on 6 April 2001, in which the Tribunal upheld the applicant, Mr Maconnachie's claim for arrears of holiday pay and awarded him the sum of £277.12.
2. The appellant does not appeal the finding on liability but appeals the quantum. Put shortly, the Tribunal decided that there was a balance of accrued holiday pay entitlement of eight days due to Mr Maconnachie. The calculation of £277.12 was based on a calculation of a daily rate of pay taking as the relevant number of days the 233 working days in a year. The appellant argues that the appropriate number of days in a year for the calculation of the daily amount of pay is 365 days. The difference would amount to £100.24. The amount involved is so insignificant that, for understandable reasons, the appellant has not attended this preliminary hearing but has limited itself to relying on its Notice of Appeal and the terms of the letter dated 18 January 2002.
3. The decisions it refers to are decisions of the Employment Appeal Tribunal in Thames Water Utilities v Reynolds [1996] IRLR 186 and Morley v Heritage Plc [1993] IRLR 400. Put shortly, in Thames Water Utilitites the EAT decided that the provisions of the Apportionment Act 1870, Section 2 prevailed. That Act provided that:

"All periodical payments in the nature of income shall be considered as accruing from day-to-day and shall be apportionable in respect of time accordingly."

4. In the case of Thames Water Utilities v Reynolds the EAT concluded that day-to-day meant calendar days and not working days. In so doing the EAT was following another first instance decision in the case of Ray BCCI SA [1994] IRLR 282. In that case the decision in Morley v Heritage Plc was described as so far removed from the instant dispute as to be unhelpful and we agree with that.
5. On the face of it, therefore, it might be thought that this was an appeal with an arguable prospect of success. It is, however, the strong view of the lay majority members of this Tribunal that such an approach is at odds with the virtual universal practice in industry in respect of the calculation of holiday pay in respect of holiday entitlement accrued which is by reference to a day's work rather than calendar days per year. Furthermore, the case of Thames Water predates the Working Time Regulations 1998 which provide the paradigm for provisions in respect of payments in respect of periods of leave. In particular paragraphs 13, 14 and 16 all contain provisions governing entitlement to annual leave, compensation related to entitlement to leave in the event of termination and payment in respect of periods of leave. Furthermore, reference is made in paragraph 16 to the provisions of sections 221 to 224 of the Employment Rights Act 1996 which concern the calculation of a week's pay, amongst other things, in employments with normal working hours and employments with no normal working hours. It is noticeable that all of these provisions take as their working assumption the hours actually required to be done, not the number of hours in a 24 hour day or a 7 day week. It therefore seems to us that in this particular context the concept of day-to-day accrual for the purposes of calculating payment for accrued holiday entitlement must be by reference to the number of working days in the year and not the number of calendar days in the year. It therefore follows that for this purpose the decision of the Employment Tribunal was plainly right and the point raised by the appellant is not reasonably arguable.
6. We may say that if the employer in this case was right a most unsatisfactory circumstance might arise. If the appropriate divider for the calculation of a day's leave payment is 365 days per calendar year and not the number of working days in the year, then it would frequently arise that accrued holiday pay accrues at a daily rate which reflects less than the statutory minimum wage per hour for the day's holiday from the obligation to work. That is an absurd situation which contradicts the entire purpose of the relevant legislation and confirms in our mind the unarguable nature of the appellant's case.
7. It therefore follows that this appeal is dismissed at this stage.