It is very rare for me to comment on an employment tribunal judgment that has not been the subject of an appeal, not least because such judgments do not provide a binding authority which can be applied in other cases. However the judgment of Employment Judge van Gelder in the Birmingham tribunal in Neal v Freightliner Limited is worthy of note since it deals with the very practical question of whether holiday pay should include provision for notional overtime.
Mr Neal worked as a “Multi-Skilled Operative” (MSO) at Freightliner’s Birmingham depot. In early 2012 he raised a grievance concerning his holiday pay. The grievance was followed by an employment tribunal claim in respect of a series of unauthorised deductions from wages in relation to alleged underpayment of holiday pay and breaches of the Working Time Regulations 1998. The issue was straightforward. Freightliner contended that Mr Neal was entitled to holiday payments equivalent to his basic pay whereas Mr Neal contended that his holiday pay should be calculated with reference to his normal pay, i.e. including routine overtime. The working of overtime was so routine that although Mr Neal’s contract provided for a seven hour shift, he had never worked a shift of only seven hours and his shifts were mainly nine hours and occasionally as long as twelve hours.
Having considered the Working Time Regulations and related legislation Judge van Gelder was taken by Freightliner’s representative to the 2004 decision of the Court of Appeal in Bamsey and others v Albion Engineering in which it was held that compulsory but non-guaranteed overtime did not have to be taken into account when calculating holiday pay. Mr Neal’s representative relied on the rather more recent decision of the European Court of Justice in British Airways plc v Williams and others (2011) in which it was held that holiday pay should equate to “normal remuneration”, thereby incorporating payments which are “intrinsically linked” to the work required to be carried out under the terms of the contract of employment.
Quite properly Judge van Gelder decided to adopt a purposive approach to the Directive as implemented in the Regulations, i.e. having regard to the broad objective intended to be achieved. On that basis he was readily able to conclude that holiday pay should equate to “normal pay”. When such pay is variable, holiday pay should be calculated with reference to an average over a sufficiently representative period.
Although not establishing new law, the case is a handy reference point in the event that the issue is raised. The judgment contains a detailed analysis of the Regulations and case law but the outcome is simple to apply and much as most would have expected.