Veitch Penny LLP - Exeter | Crediton, Devon

Case

Bamsey and others v Albon Engineering
Employment Appeal Tribunal - (27 March 2003)

Issues

(1) Wages
(2) Entitlement to paid annual leave
(3) Normal working ours - overtime

Facts

The employee in question had been engaged to work 39 basic hours per week. This was reflected in his contract. He was also obliged to work overtime for up to a further nine hours, if his employer so required. The employer was not required to guarantee overtime.

The employee’s average hours during 1999 were around 58 per week. For the 12-week period before Christmas, he worked an average of 60 hours. The employee took holiday for the period 24 December to 4 January 2000 and was paid an amount which was calculated at the rate of 39 hours per week, as the employer stated that these were his relevant normal working hours.

The employee, together with nine others, made a claim for compensation on the basis that their employer had committed a breach of Council Directive (EC) 93/104 (concerning certain aspects of the organisation or working time) (“the directive”), due to the employer’s failure to pay them at a rate of a week’s pay for their holiday period.

The tribunal had to consider, as a test case, whether the employee had been fully paid within the provisions of the Working Time Regulations 1998 in connection with the annual leave he had taken over the millennium.

It found that the employee was not entitled to any more pay than he had received. The employee appealed the decision. He argued that:

(i) Article 7 of the directive provided that member states had to ensure that workers on annual leave were paid by reference to what they were normally paid for working time, namely the actual time worked by the employee in question;
(ii) Regulation 16 of the Regulations, which provided that a worker was entitled to be paid in respect of any period of annual leave at the rate of a week’s pay, should be purposively construed to achieve that result;
(iii) There was nothing in sections 221 or 224 of the Employment Rights Act 1996 which prohibited that argument;
(iv) Section 234 of the Act which defined “normal working hours” (where an employee was entitled to overtime pay when employed for more than a fixed number of hours as the fixed number of hours) was not incorporated into Regulation 16 and was workable such incorporation.
(v) As a consequence, for the purpose of Regulation 16, the employee should be held to have had normal working hours of 58 hours per week at the material time.

Decision

The appeal would be dismissed. The appeal tribunal found that the purpose of Article 7 was to ensure that workers were paid when on leave at a rate comparable to the rate they normally received when at work. The original tribunal in this case had failed to recognise this purpose. When applying the normal domestic rules on construction, the provisions of section 234 of the Act were incorporated into regulation 16.

However, notwithstanding the policy behind the directive, the appeal tribunal confirmed the tribunal’s finding that it would be unworkable to construe sections 221 and 224 in the absence of section 234. To do so would leave a high proportion of uncertainly between employer and employee as to the correct number of hours to use for the purposes of the calculation for holiday pay.

Comments

Whilst this case suggests that an employer can lawfully exclude from their calculations the value of overtime which is not contractually guaranteed even if the employee habitually works the overtime, it should be noted that leave has been given to lodge an appeal at the Court of Appeal.