MR A WALKER v THE CO-OPERATIVE INSURANCE SOCIETY [2002] UKEAT 0754_01_1505

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2002] UKEAT 0754_01_1505Case No Appeal No. EAT/0754/01Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR A WALKERAPPELLANTTHE CO-OPERATIVE INSURANCE SOCIETYRESPONDENT
Before
His Honour Judge Peter Clark Ms N Amin Mr J HoughamDate 15 May 2002
[1]APPEARANCES For the Appellant MR M SUTTON (Of Counsel) Instructed by: USDAW Legal Department Oakley 188 Wilmslow Road Manchester M14 6LJ For the Respondent MR J HAND QC (Of Counsel) MR O SEGAL (Of Counsel) Instructed by: The Compliance Department Employment Law 13th Floor CIS Building Miller Street Manchester M60 OAL JUDGE PETER CLARK The principal issue in this case is whether the Appellant, Mr Walker, received the holiday pay to which he was entitled in accordance with Regulation 16 of the Working Time Regulations 1998 (WTR). WTR[2]Regulation 16 provides:
"(1) A worker is entitled to be paid in respect of any period of annual leave to which he was entitled under Regulation 13, at the rate of a week's pay in respect of each week of leave. (2) Sections 221-224 of the 1996 Act (ERA) shall apply for the purpose of determining the amount of a week's pay for the purposes of this Regulation, subject to the modification set out in paragraph (3). (3) The provisions referred to in paragraph (2) shall apply – (a) as if references to the employee were references to the worker; (b) as if references to the employee's contract of employment were references to the worker's contract; (c ) as if the calculation day was the first day of the period of leave in question; and (d) as if the references to Sections 227 and 228 did not apply. (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 the period goes towards discharging any liability of the employer to pay contractual remuneration in respect of that period."
[3]Regulation 30 provides, so far as is material:
"(1) A worker may present a complaint to an Employment Tribunal that his employer – (b) has failed to pay him the whole or any part of any amount due to him under Regulation … 16(1)."
The Contract of Employment The Appellant was employed by the Respondent as an insurance agent from 21 February 1991 until 17 May 2000.[4]The terms of his employment were contained in the collective agreement incorporated into his contract of employment. The relevant provisions were as follows: Holiday entitlement with pay He was entitled to 23 days' paid leave per annum plus public holidays. Under WTR he was entitled to 4 weeks' annual leave in each leave year (Regulation 13(1)). The contract provided that, during any period of holiday he would be paid his 'normal contractual remuneration, including basic pay.' Working hours His hours of work were variable. The contract provided (Terms of Appointment. Appendix 2. Paragraph 4):
"You are expected to work such hours as may be necessary for the proper performance of your duties."
Remuneration Remuneration was payable in accordance with the provisions of Schedule 1 to Appendix 2 of the Terms of Appointment as follows: (i) basic salary, being a fixed weekly amount paid fortnightly regardless of whether the Appellant was working or on holiday. (ii) procuration fees (proc fees), that is, a percentage payable to the agent on new business obtained and serviced by him, subject to recovery by the Respondent if the policy lapses. (iii) Commission, that is percentage payments on premiums received by the Respondent on policies attributable to his agency. Payment The Appellant was paid each fortnight after each accounting date, representing a continually recalculated annual performance-related 'bonus', that is, taking into account both proc fees and commission on a rolling basis. Fortnightly payments were made regardless of whether the Appellant was at work or on holiday. Additional bonus Schedule 1 paragraph G(ii) provided for an additional bonus, based on a specified formula. It is common ground that the Appellant was not entitled to such bonus during the relevant period. Expenses Provision was made for flat rate expenses [which arguably did not constitute part of the Appellant's pay for present purposes,] but which in any event do not feature in this case. "A week's pay" The definition of a week's pay for the purposes of WTR Regulation 16(2) is that provided for in Sections 221-224 ERA, excluding reference there made to Sections 227- 228.[5]The Appellant did not have normal working hours, but variable hours. Section 224(2) provides, in these circumstances:
"The amount of a week's pay is the amount of the employee's average weekly remuneration in the period of twelve weeks ending – where the calculation date is the last day of a week, within that week, and otherwise, with the last complete week before the calculation date."
The Appellant's case 6. It was the Appellant's case below that: (1) as an employee with no normal working hours his holiday pay should be calculated in accordance with the '12-week average' formula provided for in Section 224(2) ERA (the Section 224 formula). (2) that the Respondent had not used that formula in computing his holiday pay (3) that as a result the holiday pay which he had received during 1999-2000 was less than his statutory entitlement under Regulation 16 WTR (4) in particular, he had lost the opportunity to earn proc fees and commission whilst on holiday, which loss was not reflected in the holiday pay which he received (5) that in the circumstances he was entitled to the shortfall in holiday pay; (a) under Regulation 30(1)(b) WTR and/or (b) as being an unlawful deduction from his wages contrary to Section 13 ERA (6) that he was further entitled to a declaration: (a) that the Respondent had made a series of unauthorised deductions from his wages (ERA Section 24) and (b) that the Respondent had failed to provide him with written particulars of terms and conditions of his contract of employment relating to his entitlement to holidays including public holidays and holiday pay (sufficient to enable his entitlement to be precisely calculated) contrary to Section 1(4)(d)(i) ERA. (The Section 11 reference). 7. An additional claim for breach of contract, which failed below, does not feature in this appeal. The Employment Tribunal Decision[8]By a reserved decision with extended reasons corrected on 25 September 2001 an Employment Tribunal sitting at Stratford decided the issues raised by the Appellant in his complaint as follows:(1) as a matter of fact: (a) the Appellant had exaggerated his evidence. Where a conflict arose they preferred the evidence given by witnesses for the Respondent to that given by the Appellant and his witnesses. (b) on the factual issue as to whether, whilst on holiday, the Appellant lost the opportunity to earn proc fees and commission they found it to be 'highly insignificant' (reasons Paragraph 11 (xviii)) such that it could be regarded as totally de minimis (Paragraph 16) in circumstances where no money was generated by 'cold-calling' on strangers (Paragraph 11 (xiv); when on holiday clients of the Appellant's agency were left a contact number of the district manager in order to deal with enquiries in respect of their current policies or new business. Facilities existing for payment which was credited in his absence to his agency (Paragraph 11 (xii); prior to departing on holiday, agents were encouraged to complete a canvass planner in order that sales managers could pursue any prospects within the agency whilst the agent was on holiday (Paragraph 11 (xxvii). The Appellant indicated that he did not expect extra sums of money to be paid whilst he was on holiday (Paragraph 10). In short, we infer from the Employment Tribunal's findings of fact as a whole, the Appellant was 'covered' whilst away on holiday. (c) his fortnightly pay reflected a fraction (one – twenty – sixth) of a continually recalculated annual performance-related bonus (Paragraph 11(x)). (d) in 1999 and 2000 the Appellant's earnings were exceedingly similar whether the Section 224 formula or his actual earnings statements were used. The variation upon computation in accordance with the Section 224 formula produces a £54 total in favour of the current contractual position (Paragraph 11 (xiii)).(2) As a matter of law: (a) Section 224 cannot be relevant to the appropriate calculation in the context of this case given the singular nature of the Appellant's employment. Accordingly his holiday ought not to be calculated in accordance with the Section 224 formula for the purposes of Regulation 16(2) WTR. The Respondent had not used that formula in his case (Paragraphs 12-13). (b) he was not entitled to a determination under the Section 11 reference as to the particulars the Respondent ought to have given him in respect of the calculation of his annual holiday pay (Paragraph 14) (c) premiums falling due from annual collection during periods of annual leave collected by the Appellant outside of such periods were not payments by the Respondent of commission and/or proc fees calculated upon such premiums made "in respect of [a] period of annual leave" within the meaning of Regulation 16(1) WTR (Paragraphs 8(v) and 14)(3) as a result (a) even if the Section 224 formula is applied, the Appellant suffered no loss under the contractual formula for holiday pay (b) any lost opportunity to earn proc fees/commission whilst on holiday was ' de minimis' . (c) there was no breach of Regulation 16 by the Respondent, nor unlawful deduction from the Appellant's wages. (d) the Section 11 reference was dismissed. (e) accordingly, the complaint failed. The Appeal[9]Mr Mark Sutton submits that the Employment Tribunal erred in law in so far as they may be taken, from Paragraphs 12-13 of their reasons, to have concluded that the Section 224 formula did not apply in this case. Plainly it does, as Mr John Hand QC accepts. Does that error vitiate the Employment Tribunal's decision?[10]We think not, for the following reasons:(1) on the Employment Tribunal's findings of fact the Appellant's core contention, that he had lost the opportunity to earn commission/proc fees whilst on holiday, which loss ought to have been reflected in his holiday pay, was not made out.(2) The system of fortnightly pay, regardless of whether the Appellant was on holiday or at work, based on a fixed weekly basic wage and a recalculated annual performance-related bonus revealed no contractual distinction between pay whilst working and when on holiday.(3) Applying the Section 224 formula produced a figure for holiday pay slightly under the contractual payment. Thus, applying the set-off provisions in Regulation 16(5), the Appellant was entitled to the slightly higher contractual holiday pay actually paid by virtue of Regulation 16(4) WTR. 11. For these reasons we are satisfied that the Employment Tribunal was correct in finding that there was no breach by the Respondent of Regulation 16 so as to found either a claim under Regulation 30(1)(b) or any unlawful deduction from wages for the purposes of Section 13 ERA. 12. As to the Section 11 reference, Mr Sutton submits that the particulars provided by the Respondent in relation to holiday entitlement and pay were inadequate, in that no reference is made to the Section 224 formula, imported into the contract by Regulation 16(2) WTR. We disagree. In our judgment the particulars provided by way of the contractual documentation to which we have referred adequately state the Appellant's contractual entitlement to holiday and holiday pay. Accordingly the Section 11 reference fell to be dismissed, since the particulars provided by the Respondent in relation to holidays complied with Section 1(4)(d)(i) ERA. 13. Mr Sutton also takes a point on the construction of the words "in respect of a period of leave" in Regulation 16(1) and (5) (the difference in precise wording being immaterial, in our view, for present purposes). He submits that the obligation to pay arises under Regulation 16(1); it is then necessary to identify the actual contractual remuneration paid to the Appellant in respect of the relevant period of leave. That entails a detailed analysis of actual payments of proc fees and commission made. 14. This submission is directed to the Employment Tribunal's finding at Paragraph 27 of their reasons, where they say:
"… any obligation to pay under Regulation 16(5) is entirely cancelled out by the annualised calculation that produces the sums payable during the time the holiday is taken."
[15]Mr Hand accepts, we think correctly, that at Paragraph 27 the Chairman, in drafting the Employment Tribunal's reasons, has omitted a phrase. The sense of the finding is that "any obligation to pay under Regulation 16 (1) is pursuant to Regulation 16(5) entirely cancelled out …" When read in this way, given the Employment Tribunal's earlier findings of fact to which we have referred, the statement is unexceptionable.[16]Next, Mr Sutton raised a number of complaints as to particular findings of fact on the basis that there was no evidence to support such findings. Whilst that is a legitimate ground of appeal, that of perversity properly so-called (see Piggott Bros Ltd v Jackson [1992] ICR 85, 92D, per Lord Donaldson MR) it is equally apparent that in order to judge such a submission it is necessary for us to see the relevant parts of the Chairman's Notes of evidence. See Piggott .[17]There has been no application by or on behalf of the Appellant for the Chairman's notes in order to make good these submissions. Accordingly we are unable to reach the conclusions sought. Contrary to our practice, an agreed Solicitors' note of part of the evidence given by the Respondent's witness, Mr Riley, was included in our bundle. It appears to support the Respondent's case that in respect of the Appellant's contention (grounds of appeal, Paragraph 6.4) that there was no evidence to support the Employment Tribunal's finding (reasons Paragraph 24) that the Appellant was "paid commission on annualised basis in respect of the servicing and selling of the material customer business", that Mr Riley gave such evidence which it was open to the Employment Tribunal to accept.[18]Mr Sutton finally submits that the Employment Tribunal were wrong to find (reasons Paragraph 28) that proc fees and commissions were periodical payments for the purposes of Section 2 of the Apportionment Act 1870. That was an alternative finding by the Employment Tribunal on which we do not find it necessary to make a finding of our own. Equally, whilst it is unnecessary for us to decide whether Mr Hand is correct in submitting that for the purposes of Regulation 16(2) it is necessary to read Sections 221-224 ERA as being subject to the supplementary provisions contained in Section 229, as to apportionment, our view is that had Parliament intended to adopt the provisions of Section 229 into the meaning of a week's pay for the purposes of Regulation 16(2), it would have said so. Conclusion[19]For the reasons which we have given we shall dismiss this appeal. The Employment Tribunal's material conclusions, on the facts as found, were plainly and unarguably right. See Dobie v Burns International 1984 [ICR] 812.