United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR JOHN HENDY QC and MR OLIVER SEGAL (of Counsel) Instructed by: Messrs Thompsons Solicitors Congress House Great Russell Street London WC1B 3LW
For the Respondents	MS KATE GALLAFENT (of Counsel) Instructed by: Messrs Finers Stephens Innocent Solicitors 179 Great Portland Street London W1N 6LS


 


HIS HONOUR JUDGE ANSELL

1. This is an appeal from a Decision of an Employment Tribunal held at Stratford, London, in February 2002, who, in a unanimous Decision, promulgated on 22 February, decided that the test case applicant was not entitled to any more pay than he had received in respect of his annual leave from 24 December 1999 to 4 January 2000 inclusive.
2. The Tribunal had been asked to determine as a test case whether the Appellant had been fully paid within the provisions of The Working Time Regulations 1988, in respect of the said period of annual leave taken over Christmas and New Year 1999/2000.
3. The basic facts of the case had been agreed before the Tribunal. Pursuant to his contract, the Appellant was contracted to work basic hours of thirty nine hours per week. The contract further obliged him to work overtime up to nine hours, if called upon to do so by the Respondents, but did not oblige them to guarantee any overtime. Averaging out the actual hours worked over the full weeks worked during the year 1999, the Appellant's average weekly hours worked were approximately fifty eight. For the twelve week period prior to 24 December 1999, the Appellant had worked an average of sixty hours per week. For the period of his holiday, 24 December 1999 to 4 January 2000, the Appellant was paid by the Respondents an amount which was calculated at the rate of thirty nine hours per week, which was said to be his relevant normal working hours. In March 2000, this Appellant, together with nine others, brought a claim for compensation for breach of the Working Time Directive, arising from the alleged failure by the Respondents to pay them at a rate of a week's pay, in respect of the said holiday period. Until shortly before the substantive hearing, listed from 11 February 2002, each of the Applicants had based their claim on the assertion that they were contractually entitled to work and be paid for overtime. However, by letter from the Appellant's solicitors dated 8 January 2002, that claim was abandoned, and an alternative case was put forward by letter of 10 January, namely that the Working Time Regulations do not incorporate the definition at section 234 of the Employment Rights Act 1996 of "normal working hours" and are, properly construed, inconsistent with such a definition.
4. Whilst there is a suggestion on the papers although no finding by the Tribunal that the Appellant was required to work a regular shift pattern, totalling fifty eight hours per week, and that in those circumstances, it might have been arguable that what had happened in practice might be sufficient to constitute a custom or practice which itself was sufficient to alter the nature of the contractual obligations that the parties had previously entered into, both sides agree that the principles set out in Tarmac Roadstone Holdings Ltd -v- Peacock Lockwood and Young [1973] IRLR 157 should apply, namely that unless overtime is obligatory on both the employer and the employee, normal working hours are those hours fixed by the contract, and that for the purposes of this appeal, the contractual working hours were thirty nine hours per week.

Statutory framework

5. The Working Time Regulations 1998 ("WTR") were enacted to implement Council Directive 93/104/EC of 23 November 1992 concerning certain aspects of the organization of working time ("WTD"). The relevant provision of the WTD is Article 7(1), which provides that:

" Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/ or practice."

6. This obligation is implemented by Regulation 13 of the WTR, which entitles a worker to a period of leave calculated according to the start of the relevant leave year. Payment in respect of such periods is dealt with under Regulation 16:

"(1) A worker is entitled to be paid in respect of any period of annual leave to which he is entitled under regulation 13 at the rate of a week's pay in respect of each week of leave.

(2) Sections 221 to 224 of the 1996 [Employment Rights] Act shall apply for the purpose of determining the amount of a week's pay for the purposes of the regulation, subject to the modifications set out in paragraph (3).

(3) The provisions referred to in paragraph (2) shall apply -

(a) as if references to the employee were references to the worker;

(b) as if references to the employee's contract of employment were references to the worker's contract;

(c) as if the calculation date were the first date of the period of leave in question; and

(d) as if the references to sections 227 and 228 did not apply.

(4) A right to payment under paragraph (1) does not affect any right of a worker to remuneration under his contract (" contractual remuneration")."

7. The relevant parts of sections 221-224 of the Employment Rights Act 1996 (ERA) are as follows:

" 221 General

(1) This section and sections 222 and 223 apply where there are normal working hours for the employee when employed under the contract of employment in force on the calculation date.

(2) Subject to section 222, if the employee's remuneration for employment in normal working hours (whether by the hour or week or other period) does not vary with the amount of work done in the period, the amount of a week's pay is the amount which is payable by the employer under the contract of employment in force on the calculation date if the employee works through his normal working hours in a week.

[. ..]

224 Employments with no normal working hours

(1) This section applies where there are no normal working hours for the employee when employed under the contract of employment in force on the calculation date.

(2) The amount of a week's pay is the amount of the employee's average weekly remuneration in the period of twelve weeks ending -

(a) where the calculation date is the last day of a week, with that week, and

(b) otherwise, with the last complete week before the calculation date.

(3) In arriving at the average weekly remuneration no account shall be taken of a week in which no remuneration was payable by the employer to the employee and remuneration in earlier weeks shall be brought in so as to bring up to twelve the number of weeks of which account is taken.

(4) This section is subject to sections 227 and 228.

8. Section 234 of the ERA provides as follows:

" 234 Normal working hours

(1) Where an employee is entitled to overtime pay when employed for more than a fixed number of hours in a week or other period, there are for the purposes of this Act normal working hours in his case.

(2) Subject to subsection (3), the normal working hours in such a case are the fixed number of hours.

(3) Where in such a case -

(a) the contract of employment fixes the number, or minimum number, or hours of employment in a week or other period (whether or not it also provides for the reduction of that number or minimum in certain circumstances), and

(b) that number or minimum number of hours exceeds the number of hours without overtime,

the normal working hours are that number or minimum number of hours (and not the number of hours without overtime)."

Issues

9. As set out in paragraph 12 of the Tribunal's Decision and before us, the principal issues within the Appellant's case were as follows:

(1) Articles 2 and 7 of the Directive provide for member states to ensure that workers are paid, when on annual leave, by reference to what is normally paid for working time, namely the actual time worked by the worker.

(2) Regulation 16 should be purposefully construed to achieve that result.

(3) There is nothing in sections 221 or 224 ERA which precludes that construction.

(4) Section 234 ERA should therefore be ignored as

(a) it is not expressly incorporated into Regulation 16

(b) it is said to be a deeming provision expressly "for the purposes of this Act (ERA)"

(c) its implied incorporation into Regulation 16 would lead to a result inconsistent with the purposes of the WTD

(d). Regulation 16 is workable without the incorporation of section 234.

(5) Accordingly, for the purpose of Regulation 16, the Appellant should be held to have normal working hours of fifty eight hours per week at the material time.

(6) Alternatively, the Appellant should be held to have no normal working hours and that therefore the averaging formula set out in section 224 ERA applies, giving an average for this Appellant of sixty hours.

Grounds of appeal - (1) Purpose of the WTD

10. At the heart of this appeal is the contention by the Appellant that the Tribunal erred in failing to identify the purpose of Article 7 of the WTD, namely to ensure that workers were paid when on leave at the same or a similar level to that which they normally received when at work. Mr Hendy QC, for the Appellant, in his customary clear and erudite manner, referred us to the preambles of the WTD, which included the following:

"Whereas Article 118a of the Treaty provides that the Council shall adopt, by means of Directives, minimum requirements for encouraging improvements, especially in the working environment to ensure a better level of protection of the safety and health of workers ….. whereas the Community Charter of the Fundamental Social Rights Of Workers ……declared that …… every worker in the European Community shall have a right to a weekly rest period and to annual paid leave ….every worker must enjoy satisfactory health and safety conditions in his working environment ….. whereas the improvement of workers' safety hygiene and health at work is an objective which should not be subordinated to purely economic considerations ……whereas in order to ensure the safety and health of Community workers, the latter must be granted minimum daily, weekly and annual periods of rest and adequate breaks."

In further support of his argument, he referred us to the definition of working time in Article 2 WTD, meaning

"any period during which the worker is worker at the employer's disposal and carrying out his activity or duties, in accordance with national laws and/or practice"

and also reminded us that Article 17, dealing with derogations did not permit a derogation from Article 7, the annual leave provision.

11. In UK -v- Council of the EU [1997] IRLR 30, the Court in its judgment at paragraph 45 said this:

"Since it is clear from the above considerations that, in terms of its aim and content, the Directive has as its principal objective the protection of the health and safety of workers by the imposition of minimal requirements for a gradual implementation ….."

At paragraph 28 the Court had said this:

"Furthermore, as the Advocate General has demonstrated in points 85 - 90 of his opinion, the organisation of working time is not necessarily conceived as an instrument of employment policy. In this case, the fifth recital of the preamble to the Directive states that the improvement of workers' safety, hygiene and health at work is an objective which should not be subordinated to purely economic considerations. Where the organisation of working time could be viewed as a means of combating unemployment, a number of economic factors would have to be taken into account, such as, for example, its impact on the productivity of undertakings and on workers' salaries."

In List Design Group Ltd -v- Douglas [2002] ICR 686 the EAT (Bell J presiding) referring to the WTR made reference in paragraph 45 to

"…. the public policy of doing the best to ensure that employees take proper, refreshing periods of holiday in any given year".

Similarly, in MPB Structure Ltd -v- Munro [2002] IRLR 601, the EAT sitting in Edinburgh (Lord Johnson presiding) said thus:

"Having considered the matter, we are of the view that the provisions in this contract can have the effect of limiting the effect of the Regulations. It is clear to us that the basic theme or aim of the Regulations is to ensure that workers obtain appropriate holiday leave and to do so they must have the necessary funds. We consider there is force in the point that by placing the onus of retaining the funds from week-to-week for holiday purposes on the employee, there may well arise the problem of adequate funding at the time of the holiday leave being taken and this could become compounded if sufficient service in any one year had not been served so as to build up a sufficient entitlement to be the equivalent of a week's wages during the holiday period. We consider that the only way that the provisions of the Regulations and, indeed, their spirit can be met is for holiday pay to be paid as and when the holiday is taken at the appropriate rate."

12. Mr Hendy therefore submits that since the right to paid annual leave is to further the aim of the health and safety of workers, that objective would be diminished if the employee received an amount of holiday pay markedly below the rate he would be receiving when at work, which would clearly act as a disincentive for an employee to take his full entitlement of annual leave. By ways of example, on the facts of this particular case, the Appellant would receive a weekly payment whilst on leave of £198.51, compared to his average weekly wage whilst at work in the twelve weeks preceding the period of leave of £329.99. Further he pointed to the possibility of an unscrupulous employer fixing very low contractual minimum hours, with many hours of compulsory but not guaranteed overtime, thereby paying holiday leave at a low weekly level. He further submits that since Article 2 defines working time in relation to any period when the worker is working at the employer's disposal and carrying out his activities, a similarly pragmatic approach to the payment of periods of annual leave is required, namely that payment should be on the basis of normal or actual payments made when working, not on some other artificial basis.
13. Miss Gallafent, in equally helpful submissions on behalf of the Respondent, points out that Article 7 is silent as to the rate of pay for annual leave but merely requires that workers should be entitled to paid annual leave. She further argues that Article 7 does not expressly or impliedly provide that workers should be paid by reference to working time; plainly, since a worker on leave spends no time "working or at his employer's disposal". She further compares the silence as to rate of pay in Article 7 with the Council Directive 92/85/EEC, dealing with the improvements in the safety and health of the pregnant workers which referred to the concept of an "adequate allowance" in the case of maternity leave. She argues that the philosophy of the Directive is to set down minimum requirements and not to guarantee equivalence between holiday pay and amounts received when actually at work. She argues that the relevant issue is what would the worker have been paid if he had not taken annual leave - the answer must be he would have been paid for the hours for which he was contracted to work and the Respondent contracted to pay him. All additional hours are hours that he could have worked but not which he necessarily would have worked. Indeed, she highlights the problem on the facts of this particular case where the contract provides for fifteen out of the twenty leave dates to be taken when the working premises are in fact shut down, and obviously, when overtime would not be available; yet it is argued by the Appellants that holiday pay covering a period when for the most part, overtime would not be available to any worker, should nevertheless be based on a rate which includes overtime pay.
14. The Tribunal, in paragraph 26 made reference to the requirement to interpret the WTR as far as possible in the light of the wording and the purpose of the Directive, yet in paragraphs 27 and 28 of their Decision when dealing with the submissions on this point make no reference to the underlying philosophy of the Directive, namely to ensure the safety and health of workers. Ms Gallafent suggests that this can be achieved by a four week leave period paid at a contractual minimum rate, which the Tribunal accepted.
15. Are we satisfied that the Tribunal failed properly to address the issue of the purpose of the Directive? We do not find this an easy issue to resolve. The Directive was adopted, pursuant to Article 118A of the EC Treaty, which article provides that there should be minimum requirements for encouraging improvements, especially in the working environment, to ensure a better level of protection for the safety and health of workers, and the phrase "minimum" is, as we have already pointed out, repeated in a number of the preambles to the Directive. That is to be contrasted against the requirement:

"to improve safety, health and hygiene at work, which should not be subordinated to purely economic considerations."

We are of the view that it is that latter philosophy which should, if possible, predominate and, indeed, as we have already pointed out, it is that philosophy which has been accepted by our Court as providing the underlying justification for the Regulations - see List Design and MPB Structure. We can see force in the argument that a worker, as in this case, who would only receive by way of holiday pay two thirds of his normal average weekly wage could be placed under economic pressure not to take his minimum four week entitlement. This disparity between the two levels of pay could become even more acute, should the employer seek to use the device of reducing the basic contractual hours. That risk, highlighted by the Appellants, may be misconceived, since it would then involve the employer who had reduced the basic hours, having to pay more hours of usually better paid overtime for some forty eight weeks in the year to secure the advantage of lower paid holiday pay for four weeks or so in the year. However, on balance, we are satisfied that the purpose of Article 7 is to ensure that workers are paid when on leave at a rate comparable to that which they normally receive, when at work and that the Tribunal failed to identify that purpose.

Grounds of appeal (2) How should Regulation 16 be construed?

16. In the light of our finding with regard to the purpose of Article 7, Mr Hendy submits that the proper starting point in construing Regulation 16 is to construe the Regulation, insofar as is possible, consistently with the purpose of the parent Directive, as we have found it to be. He poses the question as to whether we are obliged to incorporate section 234, which would have the effect, if incorporated, of subverting that natural meaning and clear intent of Regulation 16, construed in the light of the purpose of the parent Directive. He referred us to a series of cases dealing with the principle of purposive construction. Two from the ECJ, Marleasing SA -v- La Comercial Internacional de Alimentacion [1990] ECR 1-4135 and Verholen -v- Sociale Verzekeringsbank Amsterdam [1992] IRLR 38, followed in this country by Webb -v- EMO Air Cargo [1993] ICR 175 and R -v- Secretary of State for Employment Ex parte EOC [1995] 1 AC 1. In Webb, Lord Keith of Kinkel put the position thus at page 186 D:

"The Directive (76/207/EEC) does not have direct effect upon the relationship between a worker and an employer who is not the state or an emanation of the state, but nevertheless it is for a United Kingdom court to construe domestic legislation in any field covered by a Community Directive so as to accord with the interpretation of the Directive as laid down by the European Court of Justice, if that can be done without distorting the meaning of the domestic legislation: Duke v GEC Reliance Systems Ltd [1988] ICR 339, 352g, per Lord Templeman. This is so whether the domestic legislation came after or, as in this case, preceded the Directive: Marleasing SA v La Comercial Internacional de Alimentacion SA (Case 106/89) [1990] ECR 1-4135"

And, further, at page 187 D:

"It is to be observed that the provision of Spanish law in issue in that case was of a general character capable of being construed either widely or narrowly. It did not refer specifically to the grounds upon which the nullity of a public limited company might be ordered. If it had done so, and had included among such grounds the case where the company had been formed with the purpose of defrauding creditors of one of the corporators, the Spanish court would have been entitled and bound to give effect to it notwithstanding the terms of the Directive. As the European Court of Justice said, a national court must construe a domestic law to accord with the terms of a Directive in the same field only if it is possible to do so. That means that the domestic law must be open to an interpretation consistent with the Directive whether or not it is also open to an interpretation inconsistent with it."

17. Miss Gallafent submits that applying normal domestic principles of construction, the provisions of section 234 are incorporated into Regulation 16, by virtue of the express incorporation of sections 221 - 224. Sections 221 - 224 are in the chapter headed "A week's pay" which is Chapter II of Part XIV the interpretation section of the Employment Rights Act 1996. Section 234 is in Chapter III of the interpretation section, headed "Other interpretation provisions". She argues that applying rules of normal construction, section 234 defines "normal working hours" for all purposes within the Act; for example, in section 1 "Statement of initial employment particulars" makes reference to terms and conditions relating to normal working hours, see section 1(4)(c). Further, both section 221 and section 234 are required to interpret a week's pay and normal working hours, for the purposes of redundancy calculations. She referred us to the decision of the House of Lords in Wyre Forest DC -v- Secretary of State for the Environment [1990] 2 AC 357, where Lord Lowry, at page 365 D, set out the position thus:

"….. if Parliament in a statutory enactment defines its terms (whether by enlarging or restricting the ordinary meaning of a word or expression), it must intend that, in the absence of a clear indication to the contrary, those terms as defined shall govern what is proposed, authorised or done under or by reference to that enactment."

She therefore argues that the express inclusion of sections 221 - 224 in Regulation 16 automatically incorporates those further sections of the ERA that interpret the phrases used within the body of sections 221 - 224.

18. She further submits, in support of that principle of incorporation, that as a consequence Regulation 16(3) had to redefine certain words or phrases that would otherwise have been defined by reference to the Employment Rights Act 1996. For example, paragraph 16(3)(a) provides that any references to "employee" were references to "worker". This is because it is the expression "worker" rather than "employee" which is used throughout Regulation 16, and, indeed, is defined by the interpretation provisions contained in Regulation 2. She did not add, but could well have done, that normal working hours are not defined within Regulation 2, since they carry with them the interpretation imported from section 234. Regulation 16(3)(c) specifies that the calculation date was the "first day of the period in leave in question"; this was necessary because the interpretation section for calculation date in the Act, section 225, was silent as to the appropriate date for the purposes of calculating annual leave pay. By a further example, she submits that the word "week" used in sections 221 - 224 is again not defined within the Regulations, again because it carries with it the interpretation to be found in section 235 of the ERA 1996.
19. Further, she then contrasts Regulation 16 with Regulation 6 which deals with the length of night work. Within the calculation set out in that Regulation is the expression "normal hours of work" and because there is no other reference to the ERA in this Regulation, and no definition of "normal working hours" in Regulation 2, Regulation 6(6) defines "normal hours of work" by reference to section 234. She highlights the Appellants' case which would result in the anomaly that, within Regulation 6, a nightworker's normal hours of work are defined by reference to section 234, yet the same definition would not apply to that phrase in Regulation 16. We find great force in these submissions.
20. Mr Hendy sought to distinguish the Wyre Forest case on its facts. The case decided that the definition of "caravan" in section 29(1) of the Caravan Sites and Control of Development Act 1960, which had been incorporated into the General Development Order of 1950, governing planning applications and planning permissions under the Town and County Planning Acts, had the same meaning, in the absence of any indication to the contrary, in proposals or authorisations, made pursuant to those enactments. He submitted that the principle of incorporation set out by Lord Lowry only referred to those exercising duties or powers under the enactment in question. However, in our view, this would ignore the phrase "by reference to that enactment" in the passage of Lord Lowry, referred to above.
21. Further Mr Hendy refers us to Regulations 16(4) and 16(5) which contrast the right to payment under Regulation 16(1) to remuneration under the contract. He submits these provisions do not suggest that the right under 16(1) is to be established by reference to section 234 i.e. his minimum contractual right. We do not agree and accept the Respondents' submissions that 16(4) and (5) cover the situation where the contract fixes the holiday remuneration - whether higher or lower than the 16(1) calculation.
22. He also referred us to the decision of this Court Walker -v- Cooperative Insurance Society EAT/0754/01 where, at paragraph 18, Judge Clark said as follows:

"….it is unnecessary for us to decide whether ……… for the purposes of Regulation 16(2) it is necessary to read Sections 221-224 ERA as being subject to the supplementary provisions contained in Section 229, as to apportionment, our view is that had Parliament intended to adopt the provisions of Section 229 into the meaning of a week's pay for the purposes of Regulation 16(2), it would have said so."

Mr Hendy submitted that we should have adopted a similar approach, in relation to section 234. We cannot agree with the submission; section 229, as opposed to section 234, is not a general definition section, since it deals with methods of apportionment in calculating an average hourly or weekly remuneration. Accordingly, we agree with the Tribunal that in applying normal domestic principles of construction, section 234 would be incorporated into Regulation 16.

23. Grounds of appeal (3) Sections 221/4 workable without section 234

However, in the light of our obligation to apply purposive construction, we have to ask ourselves whether Regulation 16 can be construed as though the provisions of section 234 were not incorporated so as to give effect to the purpose of Article 7. The Appellants argue that section 221 can be constructed so that the reference to normal working hours is taken to mean the hours normally worked, rather than the hours contractually fixed. If that norm could not be identified, then, they argue, one would consider section 224, which would require an averaging of hours over the previous twelve weeks prior to the date of the leave. The lay members of this Court have perceived that in the absence of certainty arising from the use of the contractual hours, the Appellant's approach would lead to a high level of dispute and uncertainty between employer and employee as to the correct number of hours to use for the purposes of the calculation for holiday pay. Take the example of this particular case; the Appellant's hours have fluctuated throughout the year, although the average has been calculated at fifty eight hours - is that the norm? His hours appear to have increased in the weeks immediately prior to his holiday; could he have argued that that increased level, i.e. around sixty, had become the norm or, alternatively, there was no norm, and therefore one should average out the last twelve weeks, which, again, would be to his advantage. Miss Gallafent argues that in many cases it would be impossible to decide whether the calculation should be performed under section 221 or section 224.

24. Mr Hendy referred us to the decision of the House of Lords in Waite -v- GCHQ [1983] 2 AC 714 in construing the phrase "normal retirement age" in what is now section 109(1) ERA which deals with the upper age limits applying to the dismissal of an employee. Lord Fraser, at pages 723/4 sets out the position as follows:

"If the normal retiring age is to be ascertained exclusively from the relevant contract of employment, even in cases where the vast majority of employees in the group concerned do not retire at the contractual age, the result would be to give the word "normal" a highly artificial meaning. If Parliament had intended that result, it would surely not have used the word "normal" but would have referred directly to the retirement age specified as a term of the employment. Moreover, in a case where, unlike Nothman, the contract provides not for an automatic retiral age but for a minimum age at which employees can be obliged to retire, it would be even more artificial to treat the minimum age as fixing the normal age, as the respondents would have us do, even in a case where the minimum age has become a dead letter in practice. By no means all contracts of employment specify the age, or the minimum age, of retirement; indeed outside of large organisations like the civil service it is probably exceptional for the age of retirement to be specified. So, if the normal retiring age can be ascertained from the terms of the contract, there will be many cases in which there is no normal retiring age and in which the statutory alternatives of 65 for a man and 60 for a woman will automatically apply, although some other age may be well established and recognised in practice. If that were the law it might operate harshly in the case of women employees over the age of 60, as they would never be entitled to complain to the industrial tribunal of unfair dismissal unless they could establish that they were subject to a contractual retiring age higher than 60.

I therefore reject the view that the contractual retiring age conclusively fixed the normal retiring age. I accept that where there is a contractual retiring age, applicable to all, or nearly all, the employees holding the position which the appellant employee held, there is a presumption that the contractual retiring age is the normal retiring age for the group. But it is a presumption which, in my opinion, can be rebutted by evidence that there is in practice some higher age at which employees holding the position are regularly retired, and which they have reasonably come to regard as their normal retiring age. Having regard to the social policy which seems to underlie the Act - namely the policy of securing fair treatment, as regards compulsory retirement, as between different employees holding the same position - the expression "normal retiring age" conveys the idea of an age at which employees in the group can reasonably expect to be compelled to retire, unless there is some special reason in a particular case for a different age to apply. "Normal" in this context is not a mere synonym for "usual". The word "usual" suggests a purely statistical approach by ascertaining the age at which the majority of employees actually retire, without regard to whether some of them may have been retained in office until a higher age for special reasons - such as a temporary shortage of employees with a particular skill, or a temporary glut of work, or personal consideration for an employee who has not sufficient reckonable service to qualify for a full pension. The proper test is in my view not merely statistical. It is to ascertain what would be the reasonable expectation or understanding of the employees holding that position at the relevant time. The contractual retiring age will prima facie be the normal, but it may be displaced by evidence that it is regularly departed from in practice. The evidence may show that the contractual retirement age has been superseded by some definite higher age, and, if so, that will have become the normal retiring age. Or the evidence may show merely that the contractual retiring age has been abandoned and that employees retire at a variety of higher ages. In that case there will be no normal retiring age and the statutory alternative of 65 for a man and 60 for a woman will apply."

Mr Hendy contends that in the light of that authority:

(a) a proper construction of "normal" should not be highly artificial;

(b) the contractual stipulation should only be the starting point, particularly where the contractual stipulation is, in reality, only a minimum threshold;

(c) the express regard for the social policy underlying the legislation;

(d) the stress placed on the reasonable expectation and understanding of the employees concerned.

Miss Gallafent seeks to distinguish this authority on the following grounds:

(a) that unlike section 109, section 221, and thus Regulation 16, do make express reference to the contact of employment;

(b) the approach in Waite did not introduce the more difficult concept of averaging, which is required in this case if the Appellants' submissions are to be accepted;

(c) the stress placed on the reasonable expectation and understanding of the employee could simply refer to the expectation that they will receive their contractual rate when on holiday.

25. We agree with her submissions and do not find that Waite is of any particular assistance in regard to the issue as to whether sections 221-223 are workable in the absence of section 234.
26. Miss Gallafent introduces a further practical problem. Under section 1(4)(d) ERA1996, statement of initial employment particulars has to refer to any terms or conditions relating to

"entitlement to holidays, including public holidays and holiday pay (the particulars being given being sufficient to enable the employee's entitlement, including any entitlement to accrued holiday pay on the termination of employment to be precisely calculated)".

She argues that on the Appellant's case, the precise calculation under either section 221 or 224 could not take place until shortly before the date of leave when a decision would have to be taken as to either the normal hours or, in the alternative, an average over the previous twelve weeks. Thus no precise details could be included in the initial particulars.

27. We are therefore left in no doubt that notwithstanding the policy behind the Directive that we have identified, we agree with the Tribunal that it would be completely unworkable to construe sections 221-224 in the absence of section 234 - to do so would lead to a high level of industrial uncertainty as set out in paragraph 23 above. Accordingly, for the reasons that we have stated, which differ to an extent from the Tribunal, we dismiss this appeal, but in view of the important issues involved, we give leave to appeal to the Court of Appeal.