Appeal No. EAT/1419/00

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 6 April 2001

Before
THE HONOURABLE MR JUSTICE HOOPER
MR H SINGH
MR B M WARMAN

B & M RETAIL LTD	APPELLANT

MR D GARRETT	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	MR P GREATOREX
(Of Counsel)
Instructed by:
Richard C Hall & Partners
Crown Buildings
121A Saughall Road
Blacon
Chester
CH1 5ET	

MR JUSTICE HOOPER

1.	This is an Appeal against the unanimous decision of the Employment Tribunal held at Liverpool (Chairman Mr S Christie) that there had been an unlawful deduction of wages and ordering the Respondent to pay to the Applicant the sum of £754.80.

2.	The Appellant carries on business in Blackpool and the Respondent has worked for the Appellant since 3 April 1998.  On 28 July 1998 he received a contract of employment which set out in detail his rights to holiday pay.  As the Tribunal found in paragraph 5(b):

“It was an express term of the contract that holiday entitlement was determined by the employee’s length of service during the previous holiday year, the holiday year being defined as running from 1st April to 31st March and a week being calculated as five days.  The full time annual holiday entitlement for full time employees was 20 days increasing after three years or more service.  New employees with less than one year’s service within the current holiday year might take holidays but these were to be without pay and not in excess of the company entitlement.”

Thus this Respondent on 1 April 1999 had earned the right to take 20 days holiday.  As the contract made clear, (in paragraph 10.1) on leaving his employment, he would be entitled to remuneration for the holiday which he had accrued from the previous year and he would further be entitled to remuneration in respect of any holiday hours which he had in effect “earned” in the current year.  That was to be determined according to the provisions of paragraph 9.5.  That was a simple and straightforward system and we can describe it as one in which holidays are taken in accordance with accrued rights from the previous year.

3.	However, on 1 April 1999 the Appellant sent the Respondent this memo:

“RE.	Holiday Entitlement and Holiday Pay
The decision has been taken to bring the hourly paid system of holidays with pay into line with all other employees within the Company.

In effect this means that service accrued holiday entitlement will be taken on a current year basis as from the 1999/2000 holiday year.

The individual accrued entitlement to paid holiday from service during the 1998/1999 has been calculated to a monetary value and will be ‘banked’ for payment at the time of leaving or retiring from the Company.  Your calculated banked figure is £754.80.

Holiday leave will continue to be based on weekly contracted hours and the rate of accrual pro rata to the number of weeks worked in the holiday year.

All other rules on Company holidays will continue to apply.”

As to that memo a number of findings were made by the Tribunal.  First of all, that the Respondent did not agree to this amendment.  He asked on several occasions for the £754.80 to be paid to him.  When the Respondent and others queried the amendment, the response was “that’s how it is”, “the directors said no, the only way to get your money is to resign and re-apply for your position ”, and “it’s the company decision.”  The Tribunal found that “no explanation was given for the change.”

4.	We turn to the important paragraph 5(f):

“Miss Alston [a Director who was present at the hearing] confirmed that there had been no consultation before the change.  Holiday pay had accrued and been earned but the company did not just pay it because of cash flow implications.  She confirmed that the intention was that the sum referred to would be carried forward ad infinitum.  A new contract incorporating the new holiday pay terms was issued to the applicant but he did not sign and return it.  The change affected 100 workers.”

5.	The Tribunal further reached the conclusion that the contractual relationship which now governed the Appellant albeit unilaterally imposed was the original contract as amended by that memo.  We asked Mr Greatorex who appeared for the Appellant today whether he challenged that finding.  If he had submitted to us that the contractual relationship governing the Respondent was that which had been entered into by him with his employer in 1998 then one could see force in an argument that the employee should not now pay £750.  If his contractual position remained unchanged then the four weeks, which he was due to take in 1999-2000, was the four weeks which he had “earned” by having worked the previous year.  Thereafter if he remained under the old contract the consequences would have been those which we outlined at the beginning of the judgment.  Mr Greatorex did not accept that the Respondent was now operating under the old contract.  He took the view that the Tribunal had rightly reached the conclusion that the contractual arrangements had been altered.

6.	This hearing broke into two parts.  In the first part Mr Greatorex argued to us that the figure of £754.80 would be banked and would be paid to him when he retired plus a figure representing any period which he had worked in the year of his departure.  Thus if he were to continue working until 2015, say August, he would receive his £754.80 and then he would receive remuneration equivalent to the few months of work that he did between April and August 2015.  That we found to be an extraordinary proposition.  This money was to be paid without accrued interest.

7.	We invited him to take instructions as to what was the Appellant’s approach now to the contractual relationship between it and the Respondent.  Mr Greatorex returned after a phone call with Miss Alston to give us a completely different account.  The memo did not mean that the £754.80 would be banked and paid when the Respondent left the Company.  What the memo meant was that when he left he would be paid remuneration for any holiday, which he had “earned” in any period between April and the time of his departure and would be remunerated for holiday entitlement accrued the year before (which after three years’ service would be more than 20 days).  He further submitted that Miss Alston had made that clear to the Tribunal.  We find that impossible to accept on the material available before us.

8.	First of all it conflicts entirely with the contents of paragraph 5(f).  There is no reference to this in the grounds of appeal.  If Miss Alston, on receiving this decision of the Employment Tribunal, had said to herself ‘My goodness’!  The Tribunal have misunderstood my evidence completely’ she would no doubt have instructed whoever was representing the Company to put that in as a ground of appeal. 

9.	Indeed, before the break to take instructions from Miss Alston, when we asked Mr Greatorex what would be the position when the Respondent left, he said “Well he could go before an Industrial Tribunal and claim that he was entitled not only to any remuneration in respect of holiday accrued during the year of his departure but also in respect of the previous year.”  After taking of instructions from Miss Alston he said  “No, the result of this decision is that the Respondent is entitled not only to the £754.80 but also entitled on his departure to be paid in respect of the previous year.”  He said that that came about because the memo states “all other rules on company holidays will continue to apply”.

10.	We take the view that the Tribunal have reached findings of fact about that interoffice memo and it is impossible to say that those findings are perverse.  That memo can only be read as saying that £754.80 was being banked.  Reading it in that way, it had to follow that the employee was losing money.  The employee was being told that the four weeks holiday which he had “earned” in the preceding year would be converted to a sum of £754.80 and on his departure “in line with all other employees within the Company” he would only receive remuneration in respect of any holiday that he had accrued during the year of his departure and then would receive a cheque of £754.80.  That is obviously extremely unfair.

11.	On the material available to the Tribunal and given the Appellant’s position that the contractual relationships was “the original contract as amended by the memo” we see no other conclusion which the Tribunal could reach.  It would seem to us to follow that this employee’s entitlement to holiday is governed by the system applicable to all the other employees to whom reference is made in the first paragraph of the interoffice memo.  He is now on a current year basis.  He has been recompensed for the “lost year” and when he leaves he will be entitled only to any holiday pay which he has earned during the final year of his employment.  In those circumstances this Appeal is dismissed.