The questions around holiday pay live to fight another day

23 February 2016

We reported last week on the Scottish case of Barton and noted that the arrival of the decision of the Employment Appeal Tribunal (“EAT”) in Lock v British Gas may bring employers and employees closer to an answer to the elusive question of how to calculate holiday pay. That much anticipated judgment is now here, but it seems to have done nothing more than kick the can down the road.

The key question for the EAT in Lock was whether it is possible to interpret the Working Time Regulations and the Employment Rights Act 1996 in such a way as to give effect to the European Court of Justice rulings which require that workers receive their “normal remuneration” during periods of holiday. The EAT answered this question in the affirmative, meaning that commission payments, as with non-guaranteed overtime, should be included in holiday pay calculations.

However, it is not the outcome of the decision (unsurprising as it is) which produces the tantalising effects of this judgment, but rather the way in which it was reached. Mr Justice Singh relied predominantly on the previous EAT judgment in Fulton v Bear Scotland and the principle that the EAT will only depart from an earlier decision of itself if certain established exceptions apply. The two relevant exceptions in this case were if the judgment was ‘manifestly wrong’ or if there were ‘exceptional circumstances’ requiring the court to depart from it.

Each of these were considered and dismissed without the need for a full-blown dissection of the reasoning in Bear Scotland. The EAT in that case had considered and understood all the relevant law so no ‘exceptional circumstances’ could be said to exist, nor was it manifestly wrong. As such, the EAT in Lock felt that “it would be inappropriate…to reconsider the merits of the substantive argument” again.

We are still left wondering about questions which are really fundamental to the thousands of holiday pay claims stayed and sisted around the country, such as:

  • What overtime or commission counts as “normal remuneration”?
  • Which holiday is ‘EU holiday’? and
  • What is the appropriate reference period for determining normal remuneration?

So where does this leave us? That is one question that the EAT in Lock may well have answered: “if Bear Scotland was wrongly decided, then it must be for the Court of Appeal to say so, not for…this Appeal Tribunal”.

We understand that British Gas had indeed sought leave to appeal. The EAT seemed to have foreshadowed this by noting in its judgement that there are 60 such claims against British Gas in the East Midlands alone and 918 claims against it around the country.

It does seem likely that permission to appeal will be granted, given the importance of these issues and the number of claims to which they are relevant. If an appeal does go ahead then those thousands of claims around the country will almost certainly remain stayed and sisted.

Further information

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