United Kingdom Employment Appeal Tribunal

APPEARANCES

 

 

For the Appellant	Mr S B McDowall, Consultant Of- Croner Consulting 22 Anchor Avenue PAISLEY PA1 1LD
For the Respondents	Mr James Kelly, In Person 46 Auckland Place Dalmuir West CLYDEBANK G81 4JZ

SUMMARY
UNLAWFUL DEDUCTION FROM WAGES

Holiday Pay


 


LORD JOHNSTON:

1. This appeal is taken at the instance of the employer in respect of a decision of the Employment Tribunal in relation to unpaid holiday pay, that it had jurisdiction to entertain claims beyond the year of a particular leave period.
2. The decision of the Employment Tribunal is as follows:-

"Mr McDowall went on to argue that it was necessary for the Tribunal to apply a purposive approach to the interpretation of, the Regulations and in particular Regulation 13 which concerns the right to take annual leave and provides at paragraph (9) that:-

"Leave to which a worker is entitled under these Regulations may be taken in instalments, but-

(a) (a)                it may only be taken in the leave year in respect of which it is due.

and

(b) it may not be replaced by a payment in lieu except where the worker's employment is terminated."

According to Mr McDowall the correct interpretation of Regulation 13(9) prevents the applicants from recovering pay for holidays taken prior to their final leave year with the respondents. In support of his submission Mr McDowall referred me to the Inner House decision in the case of MPB Structures Ltd -V- Munro [2003] IRLR 360. He submitted that MPB Structures (supra) as a decision of the Inner House of the Court of Session is binding on this Tribunal notwithstanding any conflicting decision by the Employment Appeal Tribunal. In particular Mr McDowall cautioned me against preferring the ratio in the Employment Appeal Tribunal's decision in List Design Group Ltd v Douglas & Others [2003] IRLR 14 to that of the Inner House in MPB Structures (supra) where the Court adopted a purposive approach "(per Marleasing SA v La Comercial International de Alimentacion SA [1990] ECR 5135 ECJ).

The case of MPB Structures (supra) concerns a situation where an employer included holiday pay in a "rolled" up rate of pay. The applicant claimed that this was contrary to Regulation 16(1) which entitles a worker to be paid for annual leave taken under Regulation 13. The Employment Tribunal agreed with the applicant that "rolling up" his holiday pay was contrary to the Regulations and was rendered void by reason of Regulation 35(1). The Employment Appeal Tribunal held that the only way the provisions of the Regulations could be met was for the holiday pay to be paid at the appropriate rate as and when holidays were taken. On appeal to the Court of Session, Lord Cullen held it was clear that the Directive treats the right to annual leave and to payment for it as part of a single entitlement. While the entitlement to payment by Regulation 16, there is per Lord Cullen "a close association between the two". The Court of Session held that to satisfy Regulation 16(1) the worker must be paid not only for annual leave but also in association with the taking of that leave.

In the case of List Design (supra), the applicants sought to recover holiday pay under both the Regulations and the Act. The respondents argued successfully that in terms of Regulation 30(2)(a), the applicants' claims were presented out of time to recover holiday pay entitlement for previous leave years. The Employment Tribunal went on to find that when treated as a series of deductions in terms of Section 23 (3)(a) of the Act the claims were made in time. On appeal the Employment Appeal Tribunal held that the applicants were entitled to bring their claims for payment of holiday pay under the provisions of the Act which relate to unauthorised deductions from wages. The Employment Appeal Tribunal held that where a later instrument (the Regulations) creates a new right (the right to be paid for holiday leave) and imposes a specific time limit for the purpose of determining how that right should be enforced, the express provisions of the Act are not by implications swept away. The Employment Tribunal had therefore been correct to conclude that by withholding holiday pay to which the applicants were entitled under the Regulations, the respondents had made deductions from wages in breach of Section 13 of the Act.

I do not agree with Mr McDowall that in relation to the present case the authorities of MPB Structures (supra) and List Design Group (supra) are conflicting. MPB Structures (supra) is about the entitlement of a worker to be paid holiday pay when annual leave is taken. In the present case, it is not in dispute that the applicants took annual leave for which they were not paid. There is no suggestion that the respondents have discharged their liability to pay holiday pay in terms of Regulation 16(1). The respondents seek to avoid liability by claiming that in terms of Regulation 30(2) (a) the right of the applicants to recover pay for holidays taken during leave years prior to their final leave year is time-barred.

The applicants however have brought their complaints under Section 23(1) of the Act as an unauthorised deduction from wages. This is where the case of List Design Group (supra) is in point. In terms of Section 27(1)(a) of the Act, holiday pay is included within the meaning of wages. The respondents do not disagree that when the holidays were taken, holiday pay was properly payable to the applicants. I do not understand it to be in dispute that failure to pay the applicants any holiday pay throughout their working relationship with the respondents was a series of deductions in terms of Section 23(3)(a) of the Act.

List Design Group (supra) is authority that the applicants' complaints to recover holiday are competent. MPB Structures (supra) does not contradict this. I was not referred to any higher authorities that lead me to conclude that I cannot follow the ratio in List Design Group (supra).

The cases of MPB Structures (supra) and List Design Group (supra) deal with different issues arising from implementation of the Regulations. I am satisfied that having considered their respective application to the present case that the Tribunal does have jurisdiction in terms of Section 23(1) of the Act to consider their complaints for non-payment of holiday pay throughout the period of their working relationship the respondents and is not restricted to the final leave year.

At the request of parties, I have not made any awards to reflect any holiday pay due to the applicants. As detailed above, in respect of the second, fifth, sixth and seventh applicants the issue of time bar under Section 23(2) of the Act has still to be determined. Mr McDowall advised me that in the event of the Tribunal deciding that it had jurisdiction to consider the applicants' complaint of non-payment of holiday pay for the full period of their engagement with the respondents. It would be possible for the parties to agree between themselves on the sums due to the applicants without the necessity of further order. If this does not prove possible the applicants may refer the matter back to the Tribunal."

3. Mr McDowall, appearing again for the respondents, simply repeated the argument that he had presented to the Tribunal, relying on the case of MPB Structures. He said that the case of List Design should not be followed. The proper approach, he submitted, was that in terms of the Regulations, holiday pay was inextricably bound up with the time that the holiday was being taken and did not become an accrued right.
4. The respondents are representing themselves and one of their number simply submitted that what had happened to them was unfair, it being not disputed that the company had not paid holiday pay.
5. We have no hesitation in supporting the decision of the Tribunal following List Design supra, to the effect that the claim is in fact for unlawful deduction of wages and not for holiday pay per se, however that may be defined in terms of the appropriate Regulation.
6. In these circumstances for the reasons given by the Tribunal, we consider it reached the correct decision and this appeal is dismissed.