British Airways Plc v Noble & Anor

The Court of Appeal held that British Airways did not breach regulation 16 of the Working Time Regulations 1998 in respect of the shift element of holiday pay. The court accepted that the collective agreements produced a contractual "Consolidated Rate" of shift pay which incorporates the 48/52 multiplier and that that consolidated weekly rate is the relevant "week's pay" under regulation 16 read with section 222 of the Employment Rights Act 1996. The Employment Appeal Tribunal had erred in law in construing "in respect of each week of leave" as requiring that the paid sum be allocated to or paid during the holiday week itself; what matters is that the amount paid equals the week's pay to which the worker is entitled. The court distinguished the present case from "rolled up holiday pay" authorities and from the Court of Justice ruling in the Robinson Steele references, finding those authorities not to require an additional enhancement of holiday shift pay where the contractual consolidated rate already pays the same amount in holiday weeks and working weeks.

This appeal arises from two specimen claims by BA employees challenging the method of calculating statutory holiday pay where pay includes a shift element. The claimants worked variable shift patterns and received a contractual consolidated shift payment calculated by reference to a rostered pattern and applying a 48/52 multiplier (the "Consolidated Rate"). Since 1 August 2003 the Working Time Regulations 1998 applied so that part of the employees' holiday entitlement became statutory (four weeks/20 days), and regulation 16 requires payment "at the rate of a week's pay in respect of each week of leave."

The issues before the Court of Appeal were:

• Whether BA's use of the Consolidated Rate, which incorporates the 48/52 multiplier, resulted in underpayment of the shift element of statutory holiday pay in breach of regulation 16 read with section 222 of the Employment Rights Act 1996.
• Whether the Employment Appeal Tribunal was correct to treat the case as akin to "rolled up holiday pay" and require BA to demonstrate a "true addition" for holiday pay; and, if there were a breach, the appropriate remedy or apportionment between statutory and contractual holiday.

The Court of Appeal accepted BA's submission that the Consolidated Rate is the contractual weekly rate paid equally in holiday weeks and working weeks and therefore satisfies the statutory requirement. The court held that the Employment Tribunal's earlier reasoning misinterpreted the phrase "in respect of each week of leave". It also found that the "rolled up holiday pay" authorities and the Court of Justice ruling in the Robinson Steele references concerned different contractual arrangements and did not dictate a different outcome. As a result, BA's appeal was allowed and the Claimants' cross-appeal on remedy was dismissed as moot because no statutory breach was found.

Appeal allowed. The court held that BA complied with regulation 16 of the Working Time Regulations 1998 because the contractual Consolidated Rate (which incorporates the 48/52 multiplier) constitutes the correct "week's pay" under regulation 16 read with section 222 ERA 1996 and is paid equally in holiday weeks and working weeks; the Employment Appeal Tribunal had erred in its approach by assimilating the case to "rolled up holiday pay" and misreading "in respect of each week of leave."

Appeal to the Employment Appeal Tribunal from the Employment Tribunal judgment given on 22 June 2005; Employment Appeal Tribunal decision: UKEAT/0009/05/RN (Burton J presiding). Both parties obtained permission to appeal to the Court of Appeal, which delivered this judgment ([2006] EWCA Civ 537).