Coleman & Ors v Polestar UK Print Ltd

A worker who receives the same weekly instalment of annual salary throughout the year, including during rostered leave, is paid a week's pay for statutory annual leave. There is no need to identify a separate holiday-pay element in that salary.

The requirement that holiday pay within an hourly or daily rate be transparent and comprehensible concerns an employer seeking to set off part of such a rate under regulation 16(5). It does not apply where pay continues unchanged during leave. A normal salaried arrangement in which pay continues while leave is taken is a Category 5 arrangement.

Twenty employees working a five-week rotational shift pattern claimed unpaid holiday pay from their employer. The pattern included substantial periods when they were not rostered to work. Their contracts provided an annual salary, paid weekly, and stated that annual holidays were built into the shift pattern.

The Employment Tribunal rejected the claims. It found that each worker was entitled to, and received, one fifty-second of annual salary every week, whether working, resting or on holiday. The employees appealed, relying on authorities concerning the inclusion of holiday pay within hourly or daily rates.

The central issue was whether the continuous weekly salary failed to pay the employees for their statutory annual leave.

1. Appeal dismissed. The Employment Judge's finding that the employees received one fifty-second of their annual salary every week was a factual finding fully supported by the evidence. They were paid the same amount whether on shift, off shift or on holiday. Accordingly, they received a week's pay for every week of statutory annual leave, as required by regulation 16(1) of the Working Time Regulations 1998.

2. The authorities concerning holiday pay included in hourly or daily rates did not assist the employees. Those cases concerned workers paid only for work actually done, where the employer sought under regulation 16(5) to set off an identified part of the hourly or daily payment as holiday remuneration. In that situation the holiday element must be transparent and comprehensible.

3. No such set-off arose here. The employer did not contend that part of an hourly or daily rate discharged its holiday-pay liability. It paid a fixed weekly salary regardless of work, hours or leave. The Employment Judge was therefore correct not to undertake the classification exercise in Marshalls Clay Products v Caulfield.

4. In any event, the arrangement was a Category 5 contract: a normal arrangement under which employees continue to receive their regular pay while taking annual leave. It was not a Category 3 arrangement involving an unspecified inclusion of holiday pay in rates. That conclusion was consistent with Lyddon v Englefield Brickwork Ltd.

• Employment Appeal Tribunal: appeal dismissed; the Tribunal upheld the dismissal of the employees' unpaid-holiday-pay claims.
• Employment Tribunal, East London Hearing Centre: Employment Judge Foxwell dismissed the claims in a decision sent on 9 September 2014.