Walker v Co-Operative Insurance Society

For statutory annual leave, the calculation method in sections 221 to 224 of the Employment Rights Act 1996 applies where the worker has no normal working hours. Contractual holiday remuneration is credited against the statutory liability under regulation 16(5) of the Working Time Regulations 1998. There is no breach where the statutory calculation produces no more than the contractual remuneration actually paid. Contractual particulars need enable holiday pay to be calculated; they need not enable the precise amount to be predicted in advance.

Andrew Walker, a full-time insurance agent, appealed from the dismissal of his complaint that Co-Operative Insurance Society had underpaid him during annual leave. The Employment Tribunal held that the variable elements of his remuneration were paid on a rolling, annualised basis and that he had suffered no loss. The Employment Appeal Tribunal accepted that the Tribunal had erred in treating section 224 of the Employment Rights Act 1996 as inapplicable, but upheld the result because the contractual payments exceeded the statutory calculation and engaged the set-off in regulation 16(5) of the Working Time Regulations 1998. The central issues were whether the statutory calculation applied, whether there had been any shortfall or unlawful deduction, and whether the contractual particulars were adequate.

Appeal dismissed with costs summarily assessed at £15,568.75.

1. Holiday pay calculation. The Employment Tribunal was wrong to conclude that section 224 of the Employment Rights Act 1996 did not apply. For a worker with no normal working hours, the amount of a week’s pay had to be calculated under the twelve-week formula in section 224(2) and (3).
2. Set-off and absence of breach. Under regulation 16(5) of the Working Time Regulations 1998, contractual remuneration paid for the leave period counted towards the statutory liability. The statutory calculation did not exceed the contractual remuneration actually paid. There was therefore no breach of regulation 16(1), and no payment was due under regulation 30.
3. No loss from manual collections. The evidence provided no factual basis for concluding that Walker lost commission or procuration fees because he could not make manual collections while on holiday. Collections could be made in advance or by others, and the contractual requirement concerned the performance of duties rather than hourly payment.
4. Statement of particulars. Section 1(4)(d)(i) of the Employment Rights Act 1996 required particulars sufficient to enable holiday pay entitlement to be calculated, not predicted. The contractual documents identified the basis of commission and procuration fees sufficiently to meet that requirement, so no remedy arose under section 11. There was also no unlawful deduction under section 13.
5. Lord Justice Chadwick and Lady Justice Hale agreed with Lord Justice Peter Gibson.

• Court of Appeal (Civil Division) [2003] EWCA Civ 632: appeal dismissed with costs.
• Employment Appeal Tribunal: appeal from the Employment Tribunal dismissed. The EAT accepted that section 224 of the Employment Rights Act 1996 applied, but held that the error did not affect the result because the contractual holiday remuneration exceeded the statutory calculation.
• Employment Tribunal: complaint of underpayment under the Working Time Regulations 1998 dismissed.