East Lancashire NHS Trust v Imran Akram

The Employment Appeal Tribunal dismissed the employer's appeal against an Employment Tribunal decision on holiday pay calculation. The principal legal issues were (1) whether the annual divisor for calculating a day's holiday pay should be working days or calendar days and (2) whether section 222 of the Employment Rights Act 1996 could be relied upon to determine the divisor. The EAT held that the appeal was premature because the Employment Tribunal had chosen a multiplier (working days) but had not yet selected the multiplicand required to produce a final holiday pay figure; without both elements there is no actionable underpayment. The EAT also emphasised that Employment Tribunals must apply the calculation method set out in regulation 16 of the Working Time Regulations together with the statutory definitions in the Employment Rights Act 1996 and must first calculate the correct week's pay under those provisions.

Background and parties:

• The claimant (formerly before the Employment Tribunal) was employed by the appellant East Lancashire NHS Trust as a phlebotomist on a rota of irregular shifts and brought a complaint about underpayment of holiday pay. The appellant (the Trust) appealed the Employment Tribunal's approach to calculating holiday pay.
• Procedural posture: appeal from an Employment Tribunal decision dated 2 May 2023 (Employment Judge Aspinall and members). The appeal was heard in the Employment Appeal Tribunal on 10 October 2024.

Nature of the claim and relief sought:

• The underlying claim concerned payment in respect of periods of annual leave under regulation 16 of the Working Time Regulations and the alleged unlawful deduction from wages; the respondent (employer) appealed to challenge the method of calculation used by the Employment Tribunal.

Issues framed by the court:

• Whether the year should be divided by working days or calendar days when calculating a daily rate for holiday pay.
• Whether reference to section 222 of the Employment Rights Act 1996 can determine the appropriate divisor for calculating a day's holiday pay.
• Whether the appeal was premature given that the Employment Tribunal had not completed the remedial calculation.

Court's reasoning and conclusion:

• The EAT found the appeal premature because a complete holiday pay calculation requires both a multiplier (the chosen divisor for the year) and a multiplicand (the wage figure to be apportioned). The Employment Tribunal had selected working days as the divisor but had not fixed the multiplicand, so no final holiday pay figure or deduction had been determined to permit effective appellate intervention.
• The tribunal reiterated the legal principle that a worker should receive no less on holiday than when working and that the calculation must pass a common-sense test by reconciling the computed holiday-pay figure with actual earnings in the relevant reference period.
• As a statutory constraint, the EAT emphasised that Employment Tribunals must apply the calculation machinery in the Working Time Regulations (regulation 16) together with the statutory definitions in the Employment Rights Act 1996, first determining the correct week's pay under those provisions and then deriving daily or hourly rates from actual earnings in the relevant period.

Disposition: the appeal was dismissed as prematurely brought; remedy and detailed calculation were remitted to the Employment Tribunal for completion if necessary.

The appeal is dismissed. The EAT concluded the appeal was premature because the Employment Tribunal had selected a divisor (working days) but had not determined the multiplicand required to reach a final holiday-pay figure; without that completed calculation there is no identifiable underpayment to review. The court added that Employment Tribunals must use the calculation method in the Working Time Regulations (regulation 16) and the statutory definitions in the Employment Rights Act 1996, calculating the correct week's pay first and then deriving daily or hourly rates consistent with actual earnings and a common-sense reconciliation test.

Appeal from Employment Tribunal judgment sent to the parties on 2 May 2023 (Employment Judge Aspinall and members). This appeal was heard in the Employment Appeal Tribunal (Case No EA-2023-000602-AS) on 10 October 2024 and decided [2025] EAT 2 on 7 January 2025.