|At the Tribunal|
|On 10 October 2017|
HIS HONOUR JUDGE MARTYN BARKLEM
Transcript of Proceedings
|For the Appellant||MR LACHLAN WILSON
Messrs Hopkins Solicitors
Crow Hill Drive
|For the Respondent||MR CASPAR GLYN
(One of Her Majesty's Counsel)
Veale Wasbrough Vizards
PART TIME WORKERS
The Appellant (Claimant below) was a part-time music teacher working mostly during term-time. She had a contractual right to 5.6 weeks holiday pay, mirroring her statutory right. Rather than calculating the basis for holiday pay by the methodology set out in section 224 Employment Rights Act 1996, the Respondent calculated it on the basis of 12.07% of her total pay over a year.
The Employment Tribunal upheld this, holding that a principle of pro-rating should apply such and/or that the statutory scheme by which a week's pay was computed should, in the case of part-time workers who work fewer than 46.4 weeks per year, be read down such that holiday payment should be capped at 12.07% of annualised hours.
The Employment Appeal Tribunal upheld the appeal. The Part-time Workers Regulations 2000 have as their the overriding principle the concept that part-time workers are not to be treated less favourably than full-time workers. There is no principle to the opposite effect, and thus no basis for the judicial amendment of a statutory scheme, the provisions of which are unambiguous.
HIS HONOUR JUDGE MARTYN BARKLEM
"1. There has been no unlawful deduction of wages as a result of the application of the 12.07% calculation for the purposes of the [Claimant's] paid annual leave."
The Tribunal's Relevant Findings of Fact
"26. The agreement between the parties seen by the Tribunal in the bundle was dated 11th April 2011. This was between the Trustees of the Bedford Charity and the Claimant and confirmed her role as a Visiting Music Teacher. She would be employed at Bedford Girl's School with effect from 1st September 2011 but it acknowledged that her continuous employment commenced with the charity on 1st September 2002. The following clauses are relevant from that agreement for the purposes of this Hearing:-
"11. Duties: Your duties include, but are not limited to, providing individual personal tuition in your subject/instrument in accordance with a timetable to be agreed with the school. In addition, you are required to carry out all duties of a visiting music teacher as reasonably directed by the Director of Music. Your duties will include but are not limited to the description at Schedule 1 entitled Role of the Visiting Music Teacher …
17. Working hours: As a visiting teacher, requirements for your services will depend upon a varying level of demand for individual personal tuition in your subject/ instrument. Demand may vary from term to term. There are no minimum hours of work guaranteed to you and you have no normal hours of work.
18. Other employment: you are entitled to accept other employment or to work on your own account when your services are not required by the Charity but you may not undertake any activities which would, in the reasonable opinion of the charity, be likely to interfere with the discharge of your duties in the School or be prejudicial to the interests of the Charity and/or the School …
22. Rate of pay: You will be paid the current hourly rate of £28.77 per hour. The Charity has the right to alter the rate from time to time and any such [alteration] will be effective from the date notified to you.
23. Payment: You will be paid monthly in arrears at the end of the month directly into a bank account or building society account nominated by you …
27. Entitlement: The holiday year runs from 1 September to 31 August each year. During the holiday year you will be entitled to 5.6 weeks paid holiday. Holiday must be taken during the normal School holidays or at such other times as are convenient for the School.
28. Unused holiday: You may not carry forward any unused holiday entitlement to a subsequent holiday year. There is no pay in lieu for unused holiday.
29. Payment on termination: In the event that your employment terminates during the academic year you will be entitled to be paid in lieu of any accrued but untaken holiday based on your minimum holiday entitlement under the Working Time Regulations 1998 only and not on your entitlement under the clause above. For these purposes any paid holiday that you have taken will be deemed first to be statutory paid holiday. If your employment is summarily terminated by the Charity, you will not be entitled to pay in lieu of unused accrued holiday up to the date of your departure, save for your working time annual leave entitlement." "
"28. By letter of 17th June 2011, the Claimant was advised that there was to be a revised method of payment for Visiting Music Teachers. It was proposed that from 1st September 2011 this would be based on the number of lessons actually provided during the reporting period. They wished to move to a practice of each peripatetic teacher submitting a monthly timesheet which recorded the number of hours that had been worked each month. That would be submitted to the respective Bursar by the appropriate payroll deadline each month. It would result in a monthly payment reflecting the hours worked each month. It would not then be necessary to estimate, in advance of each term, the number of lessons to be taught nor require a reconciliation at the end of each year to ensure that the correct sums had been paid. It might result in a fluctuating monthly payment depending on a number the lessons [sic] taught in a particular month. It was recognised that January, May, August and September were likely to be lower as they are periods when fewer lessons are taught. Payments received in the other months would be correspondingly higher. As a result, it was proposed that accrued holiday payments would be made in those quieter months. What is not in dispute in these proceedings is that the Claimant was paid three times a year at the end of April, August and December."
"Correspondence between the Incorporated Society of Musicians (ISM) and the Respondent
29. Mr Peter Lapin, Legal Advisor of the ISM, started corresponding with the Respondent on 19th December 2013. In that letter he raised other matters with which this Tribunal is not concerned but also questioned whether the Claimant was receiving 5.6 paid holiday a year and asked for an explanation as to exactly how her holiday pay was calculated.
30. Mr Hodgkin replied on 7th January 2014 confirming that all Visiting Music Teachers were paid statutory leave based on the number of hours worked. They paid 12.07% of the term's accrued hours at the end of each term and consequently the VMT's received their holiday pay in their March, August and December pay packets.
31. By letter of 4th February 2014 Mr Lapin challenged this position. He accepted that the Claimant was entitled to 5.6 weeks' holiday pay per year but asserted that the school had not and did not pay holiday pay in accordance with the statutory provisions. He relied on the Working Time Regulations as stating that each week's holiday should be paid at the normal rate of pay. Where the employee's pay varied that should be an average of 12 week's payable immediately prior to the relevant holiday being taken. As the school dictated that holidays are taken outside term time holiday entitlement would be taken in three equal periods, Christmas, Easter and Summer. That equated to 1.867 weeks for each of the holiday periods and that should be paid at the average weekly pay for the previous 12 weeks of each period. That, he asserted was not the same as paying 12.07% of the amount earned during each period and that very different results were achieved by doing so. He enclosed a breakdown of the Claimant's holiday entitlement since 2011 compared with the actual holiday pay made and asserted that the Claimant had been underpaid by a total of £1,360.72. He requested the school adjust the method by which it paid the Claimant to ensure that she was paid in accordance with the Working Time Regulations and requested the school pay all outstanding holiday without delay.
32. Mr Hodgkin replied on 5th March 2014 confirming that the holiday pay was paid at 12.07% of hours worked having followed ACAS guidance. He was confident that the Claimant had been paid the correct amount and in accordance with the Regulations and that there was, in fact, no shortfall.
33. Mr Lapin was not satisfied with this response on behalf of the Claimant and by letter of 2nd April indicated the Claimant's desire to lodge an appeal against Mr Hodgkin's decision with regard to the payment of holiday pay. He asserted that the application of the ACAS guidance provided in the case of term time workers for "inaccurate results".
34. Mr Hodgkin replied on 23rd April 2014 confirming that he was prepared to treat the previous correspondence as the Claimant's first stage of the grievance procedure even though a formal grievance hearing had not taken place. If Mr Lapin was content they would move straight to the appeal. Mr Lapin confirmed that he was content to deal with the matter on that basis and it was confirmed to him to him that David Russell, the Chief Executive of the Trust, would hear the appeal with Peter Milburn, the Finance Director. The appeal hearing was scheduled for 29th May 2014. Following that hearing a very detailed letter of 10 pages was sent to the Claimant in which Mr Russell set out in detail his reasons for not upholding the appeal. It was confirmed in that letter that Mr Lapin had provided the appeal panel with a copy of the legal opinion prepared by Mr Nigel Griffin, QC, dated 18th February 2010. That opinion has not been seen by this Tribunal. It is noted it was four years old at the date of the appeal. The appeal panel also confirmed that they had been referred to three cases being:
1. Gibson v East Riding of Yorkshire  CA ICR 890
2. R v Secretary of State for Trade and Industry ex parte BECTU  IRLR 559
3. Stringer v HMRC  [ECJ] IRLR 214
35. The letter went on to set out the appeal panel's view of the legal position and also its view of the case law that had been referred to. They had taken legal advice with regard to their decision but did not waive privilege in respect of that. However, they did refer to and sent a copy of the case of Land Tirol which has been referred to at this Hearing. In coming to its decision not to uphold the appeal, the panel could not agree with the ISM's position on the entitlement to holiday pay. That was because the Court of Justice had explained that the law is the opposite of that which was asserted [on] behalf of the Claimant, namely that pro-rating is allowed by the Directive.
36. Mr Russell was satisfied that the practice adopted by the School was a 'practical approach to the drafting of the Regulations and in accordance with them'. It accorded with the guidance provided by ACAS and, indeed, also with the guidance published by UNISON. The school it had concluded appeared to have made a determination that working 32 weeks out of a 52-week year is a part time arrangement and so holiday pay should be pro-rated. That was a common sense approach and the alternative, with fewer working weeks to be labelled as full time, could lead to extreme cases, of say someone working only 12 weeks per year and arguing that they were entitled to a full 5.6 weeks paid annual holiday entitlement per year. That in his view could not have been intended and would be a perverse reading and interpretation of the Regulations.
37. It is to be noted that in the notes of the actual appeal hearing, when Mr Lapin stated that if someone was employed for 1 week per year and the contract stated they are entitled to 5.6 weeks that, in Mr Lapin's words, would "produce an absurd result" but VMT's, were, he had argued, entitled to 5.6 weeks and not pro-rated."
56. It is the Respondent's case that it has paid the Claimant holiday pay in accordance with the ACAS guidelines which provided as follows.
"What leave to casual workers get?
If a member of staff works on a casual basis or very irregular hours, it is often easiest to calculate holiday entitlement that accrues as hours are worked.
The holiday entitlement of 5.6 weeks is equivalent to 12.07 per cent of hours worked over a year.
The 12.07 per cent figure is 5.6 weeks' holiday, divided by 46.4 weeks (being 52 weeks - 5.6 weeks). The 5.6 weeks are excluded from the calculation as the worker would not be at work during those 5.6 weeks in order to accrue annual leave …
What leave to term-time workers get?
There is no specific calculation for working out the holiday entitlement for term-time workers. You may find it useful to look at the calculations that are used for annualized hours or casual/irregular hours (see the table on page 12 or use the 'ready reckoner' calculator at www.gov.uk)." "
"59. Regulation 13 of the Regulations enacts the Directive and provides that:
(1) … a worker is entitled to four weeks' annual leave in each leave year …
(9) Leave to which a worker is entitled under this regulation may be taken in instalments, but -
(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 payment in lieu except where the worker's employment is terminated.
60. Regulation 13A of the Regulations granted workers an extra 1.6 weeks, 8 days, per year. This is merely a domestic rather than EU measure. Accordingly, the 20 days are subject to review by the CJEU and to the precepts of European law but the extra domestic days are not.
61. Regulation 14 takes advantage of the exception set out in subparagraph (2) of Article 7 of the Directive, as follows:
(1) This regulation applies where -
(a) a worker's employment is terminated during the course of his leave year; and
(b) on the date on which the termination takes effect ('the termination date'), the proportion he has taken of the leave to which he is entitled in the leave year under regulation 13 and regulation 13A differs from the proportion of the leave year which has expired.
(2) Where the proportion of leave taken by the worker is less than the proportion of the leave year which has expired, his employer shall make him a payment in lieu of leave in accordance with paragraph (3) …
62. Regulation 16 provides:
(1) A worker is entitled to be paid in respect of any period of annual leave to which he is entitled under regulation 13 [and regulation 13A], at the rate of a week's pay in respect of each week of leave.
(2) Sections 221 to 224 of the 1996 Act shall apply for the purpose of determining the amount of a week's pay for the purposes of this regulation, subject to the modifications set out in paragraph (3) …
(4) A right to payment under paragraph (1) does not affect any right of a worker to remuneration under his contract ("contractual remuneration").
(5) Any contractual remuneration paid to a worker in respect of a period of leave goes towards discharging any liability of the employer to make payments under this regulation in respect of that period; and, conversely, any payment of remuneration under this regulation in respect of a period goes towards discharging any liability of the employer to pay contractual remuneration in respect of that period.
64. The Employment Rights Act 1996 (ERA) Section 224 provides:
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 the 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) The section is subject to sections 227 and 228."
"65. Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000
Regulation 2 deals with the meaning of full and part time worker and sub paragraph (4) provides:
A full-time worker is a comparable full-time worker in relation to a part-time worker if, at the time when the treatment that is alleged to be less favourable to the part-time worker takes place -
(a) both workers are -
(i) employed by the same employer under the same type of contract, and
(ii) engaged in the same or broadly similar work having regard, where relevant, to whether they have a similar level of qualification, skills and experience; and
(b) the full-time worker works or is based at the same establishment as the part-time worker or, where there is no full-time worker working or based at that establishment who satisfies the requirements of sub-paragraph (a), works or is based at a different establishment and satisfies those requirements.
66. Regulation 5 sets out the definition of less favourable treatment of part-time workers
5. - Less favourable treatment of part-time workers
(1) A part-time worker has the right not to be treated by his employer less favourably than the employer treats a comparable full-time worker -
(a) as regards the terms of his contract; or
(b) by being subjected to any other detriment by any act, or deliberate failure to act, of his employer.
(2) The right conferred by paragraph (1) applies only if -
(a) the treatment is on the ground that the worker is a part-time worker, and
(b) the treatment is not justified on objective grounds.
(3) In determining whether a part-time worker has been treated less favourably than a comparable full-time worker the pro rata principle shall be applied unless it is inappropriate.
(4) A part-time worker paid at a lower rate of overtime worked by him in a period than a comparable full-time worker is or would be paid for overtime worked by him in the same period shall not, for that reason, be regarded as treated less favourably than the comparable full-time worker where, or to the extent that, the total number of hours worked by the part-time worker in the period, including overtime, does not exceed the number of hours the comparable full-time worker is required to work in the period, disregarding absences from work and overtime.
67. Council Directive 97/81/EC (applied to the UK by Directive 98/23) concerning the Framework Agreement on part-time work provides, under Clause 4, for the Principle of non-discrimination that, where appropriate, the principle of pro rata temporis shall apply. The pro rata principle in British law is defined as meaning that
Where a comparable full-time worker receives or is entitled to receive pay or any other benefit, a part-time worker is to receive or be entitled to receive not less than the proportion of that pay or other benefit that the number of his weekly hours bears to the number of weekly hours of the comparable full-time worker.
68. "Weekly hours" are dealt with in Regulation 1(3)
In the definition of the pro rata principle and in regulations 3 and 4 "weekly hours" means the number of hours a worker is required to work under his contract of employment in a week in which he has no absences from work and does not work any overtime or, where the number of such hours varies according to a cycle, the average number of such hours."
The Tribunal's Decision
"97. With regard to the claim under the Working Time Regulations all of the cases, including Greenfield establish that pro-rating is appropriate and again, this is achieved by applying the 12.07 per cent.
98. The Tribunal agrees that it is necessary to read into the Regulations the wording as suggested by Counsel at paragraph 72 which is again set out as follows:
That Regulation 16(3)(d) should be amended as follows:
as if reference to sections 227 and 228 did not apply and in the [sic] and, in the case of the entitlement under regulation 13 where a worker has no normal hours and works 46.4 weeks per year any such payment should be capped at 12.07 per cent of annualised hours.
99. If the Tribunal were wrong in its above conclusion, then it accepts the Respondent's secondary case that the entitlement to 5.6 weeks is pro-rated. That would entitle the Claimant to the following leave depending on the amount of weeks worked in the year.
|Weeks worked||Weeks holiday||1/3|
|32 weeks is 0.69 of 46.4||3.86||1.29|
|33 weeks is 0.71||3.98||1.33|
|34 weeks is 0.73||4.09||1.36|
|35 weeks is 0.75||4.2||1.4|
The Law as before the Tribunal
"67. Though it is the effect of the interpretation, rather than the precise words which matters, a conforming interpretation is best expressed by amending regulation 16(3)(d) of the Working Time Regulations 1998 to insert the following italicised words, as the tribunal in Freightliner v Neal thought appropriate, and as the Secretary of State for Business Innovation and Skills regards as permissible, namely: "(d) as if the references to sections 227 and 228 did not apply and, in the case of the entitlement under regulation 13, sections 223(3) and 234 do not apply."
"(5) If the number of working hours is changed, the annual leave which is not yet been taken is adjusted proportionally to the number of hours in the new contract."
"27. By its second question the National Court is essentially asking whether relevant European Union law, and in particular Clause 4.2 of the framework agreement on part-time work, must be interpreted as precluding a national provision such as paragraph 55(5) [see above] … under which, in the event of a change in the working hours of a worker, the amount of leave not yet taken is adjusted in such a way that a worker who changes from full-time to part-time employment suffers a reduction in the right to paid annual leave which he has accumulated while working full-time, or he can take only take that leave with a reduced level of holiday pay."
"32. It follows from the above that the taking of annual leave in a period after the reference period has no connection to the hours worked by the worker during that later period. Consequently, a change, and in particular a reduction, of working hours when moving from full-time to part-time employment cannot reduce the right to annual leave that the worker has accumulated during the period of full-time employment.
33. On the other hand, it is indeed appropriate to apply the principle of pro rata temporis, set out in Clause 4.2 of the framework agreement on part-time work, to the grant of annual leave for a period of employment on a part-time basis. For such a period, the reduction of annual leave by comparison to that granted for a period of full-time employment is justified on objective grounds. However, that principle cannot be applied ex post to a right to annual leave accumulated during a period of full-time work."
"35. It follows that, as regards the accrual of entitlement to paid annual leave, it is necessary to distinguish periods during which the worker worked according to different work patterns, the number of units of annual leave accumulated in relation to the number of units worked to be calculated for each period separately."
"38. However, whereas the provisions of clause 4.2 of the Framework Agreement on part-time work and those of Article 7 of Directive 2003/88 do not require Member States to make a new calculation of entitlement to annual leave already accumulated where a worker increases the number of hours worked, neither do they preclude the Member States adopting provisions more favourable to workers and making a new calculation.
39. As is apparent from clause 6.1 of the Framework Agreement on part-time work and Article 15 of Directive 2003/88, those two instruments, which only establish a minimum protection of certain rights of workers, do not restrict the power of the Member States and the social partners to apply, or to introduce, provisions that are more favourable to workers, and to provide for such a recalculation of the entitlement to paid annual leave."
"(2) Article 137 of the Treaty provides that the Community is to support and complement the activities of the Member States with a view to improving the working environment to protect workers' health and safety. Directives adopted on the basis of that Article are to avoid imposing administrative, financial and legal constraints in a way which would hold back the creation and development of small and medium-sized undertakings.
(4) The improvement of workers' safety, hygiene and health at work is an objective which should not be subordinated to purely economic considerations.
(5) All workers should have adequate rest periods. The concept of 'rest' must be expressed in units of time, i.e. in days, hours and/or fractions thereof. Community workers must be granted minimum daily, weekly and annual periods of rest and adequate breaks. It is also necessary in this context to place a maximum limit on weekly working hours."