British Airways Plc v Noble & Anor

Statutory holiday pay must be calculated by reference to the worker’s normal remuneration for each week of statutory leave. The Working Time Regulations 1998 do not require an enhanced rate merely because a contractual shift-pay formula spreads remuneration earned over working weeks across the whole year. Where identifiable shift pay is paid for identified holiday weeks at the same rate as for working weeks, the statutory requirement is met. The case is distinct from rolled-up holiday pay cases, where holiday pay cannot be attributed to specific periods of leave and the issue is whether any genuine holiday payment has been made.

Two British Airways employees challenged the calculation of the shift element of their statutory holiday pay. Their collective agreements calculated a consolidated shift rate by aggregating shift payments, averaging them, and applying a 48/52 multiplier. The resulting rate was paid throughout the year, including during holiday.

The employment tribunal upheld the employees’ claim. The Employment Appeal Tribunal, in UKEAT/0009/05/RN, dismissed BA’s liability appeal and allowed an appeal on remedy. Both sides then appealed to the Court of Appeal. The central issues were whether the consolidated rate satisfied regulation 16 of the Working Time Regulations 1998, read with section 222 of the Employment Rights Act 1996, and whether the arrangements were analogous to rolled-up holiday pay.

1. BA’s appeal allowed; the employees’ cross-appeal dismissed. The orders of the employment tribunal and Employment Appeal Tribunal were set aside. The remedy and apportionment issue did not arise. Lord Justice Mummery gave the judgment, with Lord Justice Scott Baker and Sir Charles Mantell agreeing.
2. Regulation 16(1) of the Working Time Regulations 1998 requires payment for each week of statutory leave at the rate of a week’s pay. It does not require the payment to be allocated to the holiday week in which it is made. The relevant rate is determined through regulation 16(2) and sections 221 to 224, including section 222, of the Employment Rights Act 1996.
3. The 48/52 multiplier was an agreed contractual component of the consolidated shift-rate formula. It spread payments earned for shift work in 48 weeks over 52 weeks. It was not a reduction introduced by BA when applying the statutory holiday-pay provisions.
4. The decisive consideration was that the employees received identifiable shift pay during specified holiday periods at the same rate as during working periods. The Regulations did not require enhanced shift pay for holidays, or an additional payment above the normal contractual rate, where the same rate was paid for work and leave.
5. The rolled-up holiday-pay authorities did not assist. In those arrangements, remuneration for leave was included in the hourly or daily remuneration for work and no specific holiday period could be identified. The Court of Justice ruling in Robinson Steele v. RD Retails Services Ltd C-131/04 and C-257/04 concerned that different arrangement and did not alter the result.
6. BA’s method was compatible with the health and safety purpose of the applicable working-time directive because the employees were no worse off by taking statutory leave. The claimants’ complaint was in substance directed at the agreed contractual method of calculating shift pay, not at BA’s application of the Regulations.

• Court of Appeal (Civil Division): BA’s liability appeal was allowed and the tribunal and Employment Appeal Tribunal orders were set aside. The employees’ appeal on remedy and apportionment was dismissed because that issue no longer arose.
• Employment Appeal Tribunal UKEAT/0009/05/RN: BA’s appeal on liability was dismissed and an appeal on remedy was allowed.
• Employment Tribunal: The claimants succeeded on their claim that BA had not paid the correct statutory holiday pay.