Walker v Co-Operative Insurance Society

The Court of Appeal dismissed Mr Walker's appeal against the Employment Appeal Tribunal and the Employment Tribunal on claims about holiday pay under Regulation 16 of the Working Time Regulations 1998 and the calculation provisions in sections 221–224 of the Employment Rights Act 1996. Although the Tribunal was wrong to hold that section 224 did not apply, the factual findings showed that the contractual, annualised method of pay produced holiday pay at least equal to the statutory calculation and thus there was no breach of Regulation 16(1) once Regulation 16(5) (set‑off against contractual remuneration) was applied. The court also held there was no unlawful deduction under section 13 and no failure to provide adequate particulars under section 1 of the 1996 Act such as to give rise to a remedy under section 11.

This appeal concerned an insurance agent's claim that his employer, Co‑operative Insurance Society Ltd (CIS), had not paid him correctly for periods of annual leave in accordance with the Working Time Regulations 1998 (in particular Regulation 16) and the calculation method in sections 221–224 of the Employment Rights Act 1996.

Background and procedural posture:

• The appellant, Mr Andrew Walker, was a full‑time CIS agent whose remuneration comprised a modest fixed basic salary, an expense allowance and the majority by procuration fees and commission paid on a rolling basis. He worked as an agent from 1991 until May 2000.
• Mr Walker brought proceedings before the Employment Tribunal claiming that contractual holiday pay did not reflect the statutory entitlement calculated by section 224(2) and sought declarations under section 11, compensation and/or relief for unlawful deductions. The Tribunal dismissed his claims. The Employment Appeal Tribunal (EAT) accepted that the Tribunal had been wrong to say section 224 did not apply but concluded on the Tribunal's factual findings that no breach of Regulation 16(1) was made out. Mr Walker appealed to the Court of Appeal and permission was granted on renewal.

Issues before the Court of Appeal:

• Whether a worker with no normal hours (an agent) must have holiday pay calculated by the 12‑week averaging method in section 224(2) for each period of leave, and whether CIS had failed to comply with Regulation 16(1)–(5).
• Whether the contractual documentation complied with section 1 of the Employment Rights Act 1996 and whether a section 11 declaration should be made to amend particulars.
• Whether any unlawful deductions under section 13 occurred and whether the Apportionment Act 1870 had any application.

Court's reasoning and resolution:

• The Court accepted the EAT's finding that the Tribunal had erred in saying section 224 could not apply, but held that that legal error did not overturn the outcome because the Tribunal's detailed factual findings showed that the contractual, annualised payment mechanism produced holiday pay at least equal to the figure produced by a section 224 calculation for the periods in question. On that factual basis Regulation 16(5) operated to set the contractual payments off against any statutory liability, and Regulation 16(4) preserved contractual remuneration where that is more favourable.
• The Tribunal's findings included that lost opportunities to generate sales while on holiday were insignificant, that commission and procuration fees operated as instalments in a rolling annual calculation, and that practical arrangements existed (advance collections, district manager handling) to mitigate any loss from being on leave. The Court found these factual conclusions sufficient and unarguable to support the conclusion of no breach.
• The Court also held that the contractual documentation provided sufficient particulars under section 1 to enable entitlement to holiday pay to be calculated and so no remedy under section 11 was appropriate, and there was no unlawful deduction under section 13. It was therefore unnecessary to decide the detailed application of the Apportionment Act 1870.

Appeal dismissed. The Court agreed with the EAT that, although the Tribunal was wrong to hold that section 224 did not apply as a matter of law, the Tribunal's factual findings established that the contractual, annualised pay mechanism produced holiday pay at least equal to the statutory figure. Therefore Regulation 16(5) offset the contractual payments, there was no breach of Regulation 16(1), no unlawful deduction under section 13, and no failure of particulars under section 1 requiring relief under section 11.

Appeal from the Employment Appeal Tribunal (His Honour Judge Peter Clark) which dismissed Mr Walker's appeal from the Employment Tribunal (Register entry 8 May 2001). Permission to appeal to the Court of Appeal was initially refused on paper by Pill LJ but granted on renewal by Pill and Chadwick LJJ. Court of Appeal judgment [2003] EWCA Civ 632 dismissed the appeal.