CALLAN METHOD ORGANISATION LTD v MR A J ALVAREZ GARCIA & OTHERS [2003] UKEAT 0722_03_1510

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2003] UKEAT 0722_03_1510Case No Appeal No. PA/0722/03Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
CALLAN METHOD ORGANISATION LTDAPPELLANTMR A J ALVAREZ GARCIA & OTHERSRESPONDENT
Before
His Honour Judge Peter ClarkDate 15 October 2003
[1]APPEARANCES For the Appellant MR ROBIN CALLAN The Appellant in person JUDGE PETER CLARK This is another holiday pay claim, this time by 37 teachers employed at the Respondent's language school. There have been earlier cases. On this occasion the case of one Applicant, Mr King, was taken as a test case.[2]By his Originating Application to the Employment Tribunal Mr King stated that his employment began on 15 September 1995 and had continued, save for a break of 3 months between August and October 1998 up until the date of his Originating Application, 4 July 2001. He alleged that he had not been paid for leave taken, but that from 18 August 2000 his pay slip showed an hourly sick rate and holiday rate of pay which, when added to the basic hourly pay rate equalled the rate of pay received prior to 18 August. He complained that this reduction in his basic rate of pay was unlawful.[3]By a Notice of Appearance entered by solicitors then acting for the Respondent, Mills & Reeve, the nature of the case there advanced was that prior to August 2000 the Applicant's rate of pay included an element representing holiday and sick pay; after August those elements were separately identified on the Applicant's pay slip. It was contended that the 'rolled-up' holiday pay was lawful under Regulation 16 of the Working Time Regulations 1998 (WTR).[4]The test case of King came on for hearing before a full Employment Tribunal sitting at London (Central) chaired by Mr B C Buckley on 27 February 2003. On that occasion the Respondent did not appear and was not represented. It seems that Mr Callan, the prime mover in the Respondent had sought a postponement which was refused. He tells me that he did not have sight of that refusal because it was sent to the School in London and was not transmitted on to him at his Head Office in Grantchester. He apparently assumed that the postponement request had been granted. Pausing there I note that in the Notice of Appearance the address of the Respondent is given as the address in Oxford Street, London from which the School operates rather than the Grantchester Head Office.[5]The Employment Tribunal heard evidence and submissions by and on behalf of the Applicant and considered the Notice of Appearance. By a decision with Extended Reasons promulgated on 11 April 2003 the Employment Tribunal dismissed a separate claim by Mr King and 12 of the other applicants brought under Section 45A of the Employment Rights Act 1996, that is being subjected to a detriment for having made a claim under WTR, but upheld the claim of unlawful deductions based on the Applicant's right to holiday pay under the Regulations.[6]Against that decision the Respondent, by a letter dated 9 May 2003, indicated his intention both to appeal to this Appeal Tribunal and for a review of the Employment Tribunal's decision. I am told by Mr Callan that no formal decision was reached by the Employment Tribunal on the review application but at any rate if it was I have not been shown it.[7]Treating to that letter and its enclosures as a Notice of Appeal the Registrar at the Employment Appeal Tribunal considered its content and concluded that it raised no point of law such as to give the Employment Appeal Tribunal jurisdiction to entertain it. That jurisdiction is limited to correcting errors of law by Employment Tribunals under Section 21(1) of the Employment Tribunals Act 1996. The Registrar directed, by letter dated 8 July, that no further action be taken on the appeal under Rule 3(7) of the Employment Appeal Tribunal Rules.[8]The Respondent expressed dissatisfaction with that ruling by letter dated 31 July and on 6 August the Registrar directed that the appeal be set down for ex parte hearing before a Judge under Rule 3(10). Hence the matter now comes before me.[9]The correct interpretation of Regulation 16 of the Working Time Regulations has been the subject of some judicial debate. In Gridquest v Blackburn [2000] IRLR 168, a division of the Employment Appeal Tribunal on which I sat concluded that the question for the Employment Tribunal was whether in fact the hourly rate of pay for a worker included an element of holiday pay, in which case it fell to be credited under Regulation 16(5) against the worker's entitlement to paid holiday under Regulations 13 and 16(1). On appeal we were corrected by the Court of Appeal. [200] IRLR 604. The Court held that the worker must agree to 'rolled up' holiday pay before Regulation 16(5) is engaged. It must be a contractual term. The employer cannot unilaterally decide that a worker's hourly rate includes a holiday pay element.[10]Returning to the present case, Mr Buckley's Employment Tribunal directed themselves in accordance with the Court of Appeal decision in Gridquest as they were bound to do; found as fact that the Applicant did not agree prior to August 2000 that his hourly rate included a holiday pay element, nor did he agree to the alteration to the method of calculating his pay which followed, according to his payslips, the 18 August 2000.

(d) of their reasons where they say this:

"(d) It is apparent that there was no agreement reached with Mr King to accept holiday pay as part of the basic hourly rate. There was simply a unilateral decision made by the Respondents in August 2000 to split the basic hourly rate and designate part of it as holiday pay and sickness pay on pay statements. This was done in an attempt to avoid the Respondents' obligations under the Working Time Regulations 1998, after claims had been made by employees to holiday pay."
[11]The complaint of unlawful deductions was therefore made out, backdated to 1 October 1998 when the Regulations came into effect.[12]In seeking to challenge that decision Mr Callan has made various observations about the general principles of justice with which I need not deal in this judgment, save only to say that it is my task to do justice according to law. I discern two points which require consideration. The first is the fact that the hearing before Mr Buckley's Employment Tribunal went ahead on 27 February in the absence of the Respondent.[13]I have already touched on the circumstances which led to the Respondent not attending. An application had been made by Mr Callan at a time when the Respondent was acting in person for a postponement in order that he could carry out further preparation for the case. He personally heard nothing more. In fact a refusal of that application had been sent to the London address which appeared in the Notice of Appearance and it seems that due to an administrative oversight that was not forwarded to Mr Callan himself in Grantchester.[14]Whether or not that oversight lays blame at the door of the Respondent the simple fact is that Mr Callan assumed that his postponement application had been granted when there was no basis for such an assumption. In these circumstances I can see no arguable appeal point based on his and the Respondent's absence at the hearing on 27 February.[15]The result of that of course was that the Employment Tribunal heard no evidence from the Respondent. As to that and it brings me to the second point, Mr Callan poses this question as the critical question in the case. 'Have my teachers been paid for their holidays?' He has produced internal accounting documents which he says establishes conclusively that the answer to that question is 'Yes'.[16]I see no basis applying the Ladd v Marshall test for admitting that further evidence on appeal. It could and should have been put before the Employment Tribunal but it was not for the reasons explained earlier. However, the real difficulty faced by the Respondent, potential Appellant before me, is that that is not the right question.[17]We thought it was in Gridquest but the Court of Appeal took a different view. The question is whether there is a contractual agreement between the parties for the payment of holiday pay in addition to basic pay. I need not enter into the controversy arising out of the Court of Session decision in MPB Structures Ltd v Munro [2003] IRLR 350 considered by Burton P in Marshalls Clay Products Ltd v Caulfield [2003] IRLR 552 in this case. It seems to me, on the Employment Tribunal's permissible findings of fact, that the position is fully covered by the Court of Appeal decision in Gridquest .[18]In my view there is no error of law disclosed by this appeal. On the contrary, it seems to me that Mr Buckley's Employment Tribunal applied the law as it then stood and still stands and consequently this application must be dismissed.