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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Smith A J Morrisroes & Sons Ltd [2004] UKEAT 0563_04_2211 (22 November 2004) URL: http://www.bailii.org/uk/cases/UKEAT/2004/0563_04_2211.html Cite as: [2005] ICR 596, [2005] IRLR 72, [2004] UKEAT 0563_04_2211, [2004] UKEAT 563_4_2211

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THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)

1. This hearing was listed in relation to five appeals, all dealing with matters arising out of the judgments of the Employment Appeal Tribunal ([2003] IRLR 552) and of the Court of Appeal ([2004] IRLR 564) in Marshalls Clay. Of those five appeals, three have been effective before us, the appeal by Mr Smith in Smith v Morrisroes & Sons Ltd ("Smith"), by the Respondent Company in J J Cafferkey & Co Ltd v Byrne ("Byrne") and the appeal by Mr Wiggins in Wiggins v North Yorkshire County Council ("Wiggins"). One of the five settled last week and one, an appeal by Mr McNulty against the decision in McNulty v P C Harrington Ltd ("McNulty"), has been, on the joint application of the parties in that case, stayed pending the decision of the Court of Appeal in respect of an appeal brought by the Commissioners of Inland Revenue in a case called Commissioners of Inland Revenue v Ainsworth and Others on appeal from the Employment Appeal Tribunal (UKEAT/0650/03/TM etc), heard on 4 February 2004, which it is presently understood will be heard in March 2005.
2. Ainsworth is a case which deals with the timing and procedure for the making of a claim for holiday pay, and the Appeal Tribunal ordered that the case go, with its permission, to the Court of Appeal because of the existence of apparently conflicting decisions of the Employment Appeal Tribunal in  Kigass [2002] ICR 697, List Design Group Ltd v Douglas [2002] ICR 686 and Canada Life v Gray and Farrar (EAT/0657/03). A number of other pending appeals in the Employment Appeal Tribunal have also been stayed, pending that Decision.
3. Not only has McNulty been now stayed in its entirety, pending that Decision, but in addition there are what might be called "Ainsworth issues" arising in one of the three cases which we have heard, Smith, namely in respect of the Respondent's cross-appeal in that case,
   

and it has been agreed that we should simply deal with, and dispose of, the Marshalls Clay issues in Smith, and make no award in Smith, in relation to the balance of the issues, until after the Ainsworth judgment in the Court of Appeal.

4. For the purposes of this hearing, we have, and the parties have, accepted that the law is as stated by the Employment Appeal Tribunal and the Court of Appeal in Marshalls Clay, while preserving the rights of the Applicant in each of the three cases to take the matter further, if so advised, if the Decision in Marshalls Clay is materially affected by the reference of that case to the European Court. The circumstances, and explanation for, taking that course are set out in my judgment on the preliminary hearing in Smith, Byrne and Wiggins, given on 19 July 2004, to which I refer.
5. We received arguments at this hearing, from all those Counsel and advocates involved in the appeals, on the general question of the appropriate guidelines in a Marshalls Clay case, subject to any change hereafter in the European Court, the guidelines presently being set out in the EAT judgment in the Marshalls Clay case at paragraph 37, to which we refer. With the benefit of those arguments and our own consideration, we have concluded that it is sensible to redraft the guidelines for future guidance of employment tribunals in the following form:

There must be mutual agreement for genuine payment for holidays, representing a true addition to the contractual rate of pay for time worked.

The best way of evidencing this is for;

(a) the provision for rolled-up holiday pay to be clearly incorporated into the contract of employment;

(b) the percentage or amount allocated to holiday pay (or particulars sufficient to enable it to be calculated) to be identified in the contract, and preferably also in the payslip;

(c) records to be kept of holidays taken (or of absences from work when holidays can be taken) and for reasonably practicable steps to be taken to ensure that workers take their holidays before the end of the relevant holiday year.

6. It is, it seems to us, important, subject always to the European Court taking a different view, that there should be sensible provision, under proper guidance, for payment in an appropriate case by way of rolled-up holiday pay. Such is certainly not opposed in principle by those trade unions who have appeared or been represented in at least some of the cases which have been the subject of consideration by the Tribunal, and is often and was, of course, in Marshalls Clay itself, expressly negotiated by and with trade unions. In Marshalls Clay itself, a case in which, as we understand it, there was a seven day, 24 hour shift system, keeping the works constantly open, it seemed to the EAT in that case, and to us, difficult to think of any other way in which appropriate provision could be made for payment for holidays than the negotiated procedure which was there adopted, being based upon rolled-up holiday pay.
7. In other cases, particularly short-term employment, it may often be advantageous for the employee to know that his holiday pay is secure by its being paid on an accruing pro-rata basis during the period of his or her employment, thus avoiding a dispute about such payments with an employer at the end of such short-term employment.
8. There are also, it would seem, often economic advantages for employees where a rolled-up holiday pay is made. First, the holiday pay is paid on an accruing basis in advance, enabling sums to be saved, or invested, or even paid by way of a deposit in advance of a holiday. Secondly, it is very often the case that, where overtime is worked by employees, that overtime is paid at the contractual rate, and, because the contractual rate includes rolled-up holiday, it will mean that an employee working overtime gains extra holiday pay each time overtime is worked.
9. Nevertheless it is obvious that such a system can be subject to abuse, and hence the suggested guideline, which we hope is clearer and simpler to operate than the previous five separate guidelines, (a)-(e), set out in paragraph 37 of the judgment of the Employment Appeal Tribunal. What is important is to ensure that holiday pay is in fact being paid, and that there is a "true addition" to the contractual rate of pay for time worked.
10. We have sought to identify what we have now set out as one guideline; with the other aspects to it correctly, as we judge it, forming evidential matters, part and parcel of assisting an employer and an employee and, in due course, if necessary, a tribunal, to be satisfied about the establishment of the main guideline. There are two fundamentals in the guideline. The first is that there must be mutual agreement. This is a reflection of the Court of Appeal decision in Blackburn v Gridquest Ltd [2002] IRLR 604. The second is that there is a "genuine" or "true" addition, such as we have discussed.
11. Mr Bruce Carr, of Counsel, for the employer in Smith, and Mr Gallagher, for the employer in Byrne, sought to persuade us that the latter condition was unnecessary and that it was sufficient for the parties to establish mutual agreement, and hence a contractual term. But we are satisfied that the Working Time Regulations require more than the existence of a
    

contract, and that a tribunal has to be satisfied, in addition to there being an existing contractual provision for rolled-up holiday pay, that holidays are actually being paid for: see Article 7 of the Directive.

12. Mr Carr identified the most sensitive area as being that where there has been a variation of an existing contract with an existing employee, which did not previously include payment for holiday pay, so as to comply with the Working Time Regulations. This, of course, is hopefully now not a situation which will continue very often to arise, as all or most employers now recognize their obligations, and ought, by now, to be well past the time of adjusting their contractual arrangements to reflect the obligation to provide paid holiday time. Where there is, however, a variation of an existing contract, where holiday pay was not paid, into a new contract where holiday pay is to be paid, but by way of incorporation of a rolled-up holiday pay provision, it will be particularly necessary to show that there is not just an adjustment of the figures, but a true addition to the contractual rate of pay for time worked, so as to amount to a genuine payment for holiday.
13. Mr Hogarth QC points to the provisions of sections 13 and 15 of the Employment Rights Act 1996. He submits that if there is a variation, but such that the total remuneration remains the same, what has happened is that there has been a deduction from the pay in order to pay for the holiday, and that in the event that such took place, then the provision constituting the variation must be in writing. That may be so, and we shall address that argument, briefly, further below. But, for the purposes of this discussion, what is significant is that the variation must be a genuine means of providing for payment for holidays. We accept from Mr Carr that there may be circumstances in which an employer may be able to show that, although the remuneration in total remained the same, and thus on the face of it there was no additional
    

payment for holidays, this was because there was an agreement to reduce the basic rate because of some economic difficulties or downturn in business. That may, in certain cases, arise, but it will need to be established.

14. We are satisfied, therefore, that our new formulation enshrines what is necessary to comply with the Regulations and to accord the law as it presently stands. What we have effectively done is to elevate what used to be guideline (c), in paragraph 37, somewhat amended, and promote it to the top of the list. What were guidelines (a) and (b), and indeed (d) and (e), are now clearly set out, again somewhat amended, as being indicators of the establishment of the principal guideline.
15. Our formulation of the first two of our evidential guidelines, (a) and (b), differs slightly from the old formulations of (a) and (b) in paragraph 37, because they take into account two sets of submissions. Mr Bowers QC submitted, and we agree with such submission, in Wiggins, that there are more ways of establishing a contractual provision, in the employment field, than an express agreement, be it oral or in writing, in the usual sense. Such methods can include incorporation by or from a collective agreement, by custom or practice, or by statute. The use of the word "incorporated" in our new guideline we believe reflects that submission.
16. Secondly, we draw upon submissions from Mr Bowers QC, but also from Mr Wiggins, and from Mr Hogarth QC that account must be taken of sections 1(4)(d)(i) of the Employment Rights Act 1996. It is not, in our judgment, necessary that the calculation of the rolled-up holiday pay, either its percentage or its amount, must be actually set out in the body of the contract, but what is important is that sufficient particulars must be given, and available, to enable it to be calculated.
17. As for our (c), this is an amalgam of old (d) and (e). It is, in our judgment, simply a way of establishing the genuineness of the contractual agreement for holiday pay. Employers, however, may not be able to record the actual dates of the statutory holidays to which the employees are entitled, or which they are taking. School teachers and others may be entitled to more than the four weeks statutory holiday entitlement, and an employer will only be able to record the total period of absence within which those four weeks are taken. Similarly, if the Court of Appeal in Ainsworth decides that those on long-term sick-leave are also entitled to holiday pay, it will once again not be possible for employers to know precisely when such holiday is being taken, and it would be sufficient simply for them to be able to record the employee's absence.
18. The parties were agreeable to arguing these appeals on the basis of this new guideline, and we give our judgment on that basis.

Smith

19. This, as we have indicated, is an appeal by the Applicant, from the unanimous Decision of the Employment Tribunal at Watford, in Reasons sent to the parties on 3 November 2003, dismissing the Applicant's claims under the Working Time Regulations and for unlawful deduction of wages, on the basis that it was satisfied that the Respondent had paid all such holiday pay as was due, and had not breached regulation 16 or unlawfully deducted wages by virtue of its operating a rolled-up holiday pay scheme.
20. The Applicant was employed as a sub-contractor by the Respondent from August 1999 until 10 April 2003. His pay for the period until late 2002, no doubt increasing over the periods prior to then, was found to be £150 per day. Holiday pay was not paid. His contract, which
    was exhibited, signed on 31 August 1999 at a time before implementation of the Working Time Regulations, specifically provided that:

"The Sub-contractor is not entitled to holiday pay, sick pay or pension rights."

21. From the end of 2002, the Employment Tribunal found (paragraph 7 of its Decision) that the Applicant was informed by his site manager that he would be receiving £138 per day, while the Respondent would retain £12 from the £150 and then pay it to the Applicant as and when he took holiday. The Tribunal recorded that the Applicant was asked to sign a new contract showing that the company would honour holidays, under the Working Time Regulations, of 20 days per year. The Applicant protested against the new contract and its proposed inclusion in relation to holidays, and refused to sign the new contract, claiming:

"I was not paying for my own holiday pay out of my wages and for them to give it back to us as holiday pay."

22. The Tribunal found that the Respondent continued to pay the Applicant at the rate of £150 per day, but deducted from each day's pay £11.54, which was shown as a separate item on the pay slips in 2003 as holiday pay, which accumulated from week to week. When Mr Smith left the Respondent in April, he received a refund of all the £11.54s deducted from each day's pay, which accumulated over the period. A number of the payslips were produced, which reflected that calculation and apportionment.
23. The Tribunal found, at paragraph 21, in relation to the Applicant, that throughout the best part of 2002 he was paid a daily rate and, in addition to that, a further rate which was clearly shown on payslips as Working Time Directive holiday pay. The Tribunal recorded that the Applicant was not unintelligent, and concluded that an agreement had been reached between
    

the Applicant and the Respondents as to the rate of a further eight percent, equating to a rolled-up holiday pay to cover holiday periods., and the Tribunal concluded that this was not a unilateral change, and that the Applicant must have agreed the sums in respect of holiday pay, as they were clearly set out as part of his remuneration, first in the payslips for 2002, and then in the payslips for 2003 even more clearly, when holiday pay was held back and kept to be paid out, as indeed it eventually was.

24. The Tribunal refers to the EAT guidelines in Marshalls Clay at paragraph 37, and in particular records the fact, as was obviously the case, that what were then guidelines (a) and (b) had been complied with. We are, however, entirely satisfied that what was then guideline (c), which does not appear to have been expressly addressed by the Tribunal, was not satisfied.
25. Mr Hogarth QC submits that there was no agreement in writing in respect of the variation which occurred, pursuant to sections 13 and 15 of the 1996 Act, but Mr Carr responds that the payslips were sufficient within sections 13(2) and 15(2), and that may well be right. We make no finding in that regard. In any event the Tribunal did not base itself on either of those arguments.
26. We are, however, satisfied that there was, adopting the wording of our new guideline, no mutual agreement for genuine payment for holidays representing a true addition to the contractual rate of pay for time worked. The rate of £150 per day remained the same, both before and afterwards. We have no doubt that, as Mr Carr submitted, there may be some cases in which that may be appropriate, there being evidence to the effect of financial circumstances, such as we referred to above. But no such evidence was given in this case.
27. We are satisfied, therefore, that the arrangements evidenced by the findings of the Tribunal in this case do not satisfy the Marshalls Clay exemption from the Working Time Regulations, and that we would allow the appeal of the Applicant and make a finding in his favour as to entitlement to holiday pay, were it not for the existence of the cross-appeal, to which we have referred, which is stayed pending the decision in Ainsworth.
28. The appeal will therefore be allowed, but no further direction made so far as either an award or a remission is concerned.

Byrne

29. The facts in this appeal are somewhat different. The Employment Tribunal here found in favour of the Applicant, by a unanimous Decision of the Employment Tribunal at London South, in Reasons handed down on 22 August 2003. The Tribunal concluded that the Applicant was entitled, under the terms of the Working Time Regulations, to 18 and a half days' holiday pay, and it was, apparently, also awarded as unpaid wages under the wages provision of the Employment Rights Act 1996.
30. This is not a case where the employee was previously employed by the same employer under a different contract, making no provision for holidays, which was then sought to be varied to make provision in respect of holidays.
31. Mr Byrne commenced employment on 19 June 2002, and remained with the Respondent for 48 weeks. There was a dispute as to whether he was on an employed or a self-employed basis. He was, it seems, orally engaged on 19 June and was given a contract on the next day. That contract expressly provided that his statutory holiday pay entitlement of an additional 8 percent was added to his hourly rate, giving a total daily rate of £140.
32. The Employment Tribunal found at paragraph 2 of its Decision as follows:

"An hour or two after he commenced work the Applicant was asked to sign a "CIS Engagement Form" applicable to registered self-employed workers. This stated

"Your statutory holiday pay entitlement of an additional 8% is added to your hourly rate giving a total daily rate of £140."

The day before, the Applicant had been told by the foreman that the daily rate was £140.

33. Mr Hogarth QC, who appeared on this appeal, as he appeared for the Applicant in Smith, has sought to assert that this was a variation case, and that in some way an oral agreement for £140 the day before, without holiday pay, was sought to be varied into a written agreement for £140 including holiday pay, on the next day. We are not persuaded, however, that the Employment Tribunal either made such a finding or would have been justified in doing so.
34. The finding by the Tribunal is in paragraph 7 and, in material part, it reads as follows:

"Even though the Tribunal is satisfied that the contract into which the Applicant entered is not invalid as a whole, any provision in it which is contrary to the workers rights under the Working Time Regulations is invalid. The criteria set out in paragraph 37(ii) of the Decision in Marshalls Clay Products Ltd v Caulfield are binding on the Tribunal. A contractual provision purporting to incorporate holiday pay into a periodic pay rate must satisfy these criteria if it is to comply with the requirements of the Regulations relating to minimum holiday pay entitlement. In our view it is correct to say that the statement that 8% of £140 represents holiday pay must mean that the remainder is the daily rate of pay. As Mr Gould has demonstrated this is unclear. [It] might have been more clear if a basic rate had been stated and it had then been provided that the actual daily payment would be 108% of this basic rate. The evidence satisfies us that the accepted daily rate was £140 and that the contractual provision does not, therefore represent a true addition to the daily rate. We accept the evidence of the Applicant, which was not challenged, that the "going rate" was £140."

35. We are not, ourselves, in agreement with the Tribunal that the method of calculation fell to be criticized as it does. It seems to us that the provision in the contract, if otherwise complying with our guidelines, is quite sufficient.
36. Mr Hogarth QC did not pursue the point before us, and it appeared, albeit that there were previous uncertainties, to be common ground in the end between himself and Mr Gallagher, for the Respondent, that what was being arranged and, in due course no doubt, paid, was an hourly rate of £14, of which £12.96 was the basic rate and £1.04 in respect of holiday, on the face of the contract, although no payslips appear to have been produced.
37. The Employment Tribunal also found:

"Finally it is clear that no attempt was made to require the Applicant to take his holiday entitlement."

38. Once again we are not satisfied that that finding would be sufficient to justify the Employment Tribunal's Decision. This is not simply because we have, to an extent, downgraded what were (d) and (e) into evidential matters, rather than a fundamental recitation of a requirement in order to comply with the Regulations, but also because, it appears to us, that here, during the 48 weeks which the Applicant was in fact with the Respondent – not in itself a full year – he did take holidays for at least two weeks, and that there was a record of that holiday period.
39. The Employment Tribunal expressed sympathy with the Respondent in paragraph 8 of its Decision, on the basis that it had

"endeavoured to construct a contract complying with its statutory obligations, and [was] faced, a few weeks before [the] hearing, with a gloss upon the statutory requirement, designed to [prevent] a device which is, in some cases, an attempt to evade that requirement if that device fails to meet the legislative intention to ensure that workers receive holiday pay."

But the Tribunal was satisfied that that was

"the legislative intention, and that diversion of an element of normal pay into a sort of rolling holiday fund did not satisfy that intention."

40. We have no doubt that that sympathy was a result of persuasive arguments put before the Tribunal by the consultant then instructed, Mr Mackay, just as we have been impressed by the submissions, in similar vein, by Mr Gallagher. He has emphasised before us what he described as the bona fides of the Respondent in this case. He is satisfied that the company does in fact implement the Regulations, and that evidence could have been given as to how the £140 was made up, so as to show that in fact it did include a provision for holiday pay, and he gave us, briefly, an account orally of the history of what he described as the Respondent Company's compliance with the Regulations.
41. But none of this was put before the Tribunal. The Respondent did not give evidence and there is no attempt by Mr Gallagher, nor would it have been likely to succeed, we suspect, in any event, to rely on any application to put in fresh evidence before us. We are therefore faced with a situation in which no explanation or justification was put forward by the Respondent before the Tribunal.
42. The case which Mr Gallagher made, and which was no doubt made by the Respondent below, before the Tribunal, was based simply on an assertion that the Marshalls Clay guidelines were met, and would be met, by there being, effectively, a genuine contractual agreement between the parties, which there plainly, in this case, was. There is no question here

of any unilateral imposition; no doubt about the mutuality of the agreement. But the guideline in Marshalls Clay, and which we have now recast in the course of this judgment, is, as Mr Hogarth QC has submitted before us, additional to the requirement of the establishment of a contractual provision. We are satisfied that in addition to there being mutual agreement, as indeed we have articulated in our guideline, the Tribunal must be satisfied that that contractual provision in fact provides for genuine payment for holidays, representing a true addition to the contractual rate of pay for time worked.

43. In the absence of evidence for the Respondent in this case, the Employment Tribunal was, in our judgment, entitled to accept the evidence of the Applicant, which it records in paragraph 7 of its Decision, and to reach the conclusion which it reached in paragraphs 7 and 8 of its Decision. We are not necessarily saying that there may not be cases in which a respondent can safely decide not to call any evidence, but it is quite clear that if such a decision is made, such respondent must understand that there needs to be found by a tribunal, not only that the provision for rolled-up holiday pay was mutually agreed, but also that it constituted a true addition in the manner described. We are entirely satisfied that this Tribunal was entitled, upon the evidence it gave, to reach the conclusion that it was not so satisfied. If what Mr Gallagher told us orally is in fact the case, the only comfort is that this should create no difficulty in the future for his client company.

Wiggins

44. This is an appeal by the Applicant in person, Mr Wiggins, against the unanimous Decision of the Employment Tribunal at Newcastle-Upon-Tyne, in Reasons sent to the parties on 23 December 2003. Mr Wiggins represented himself below, when the Respondent was
    

represented, and again before us, when the Respondent, the North Yorkshire County Council, has been represented by Mr John Bowers QC. Of course we have received the usual, expected, helpful assistance from Mr Bowers QC, but we must pay tribute to the clarity and thought which was evidenced in the oral and written contributions from Mr Wiggins. We have no doubt that, although no doubt an excellent teacher, he may well have missed his vocation as an advocate.

45. The decision of the Tribunal was that the written statement of Particulars of Employment provided by the Respondent, dated 3 June 2003, be accepted, subject to one minor amendment, which it recorded, and that on that basis the Applicant was not entitled to any further payment in respect of annual leave under the Working Time Regulations 1998, regulation 16(1).
46. The Applicant had referred to the Tribunal an application for particulars to be given. He had himself produced a draft of such particulars, upon which he based his case, dated 23 May 2003, and the Respondent had prepared a rival version which, subject to the amendment described, the Tribunal accepted, date 3 June 2003.
47. The Applicant is, and has been since March 1994, what is described as an "unattached teacher". He is not attached to a school, and teaches, on an hourly rate basis, pupils as required by the Respondent council. Unattached teachers are addressed in a document which is prepared by the DFES, at page 14 of that document.
48. The Tribunal made the following findings relevant to this appeal in paragraph 5 of its Decision:

" (a) The applicant was employed by the respondents from 1 March 1994. He is employed as a Reintergration and Education Other Than at School (REOTAS) teacher.

(b) The applicant requested a written statement of particulars of employment on a number of occasions. This was not provided and he made an application to the Employment Tribunal on 22 May 2003. His complaint was stated to be failure to provide a written


statement of terms and conditions and any subsequent changes to those terms. On the same day he wrote to the respondents with what he believed to be the main points of his written particulars. It is notable that this suggested written statement of particulars included a reference to annual salary to be determined by the current School Teachers Pay and Conditions Document and being paid at the rate of one thousandth for each hour of directed time. It also referred to holidays as school holidays as notified by the respondent. He later amended his application to the Employment Tribunal to include a claim for holiday pay.

…

(e) The applicant's hourly rate is calculated by dividing the appropriate annual salary for a full-time teacher by one thousand. This is the basis on which all part-time teachers are employed by the respondent. The applicant's pay includes an element of holiday pay as is included in full-time teachers' pay which is not specifically itemised in their terms and conditions. However, the School Teachers Pay and Conditions Document 2003 states that a full-time teacher sha1l be available for work for 195 days in any school year.

…

(g) The Tribunal was referred to the case of Marshalls Clay… in which the EAT gave guidance. It was stated that a contractual provision for rolled-up holiday pay which identifies an amount or percentage by way of an addition to base pay is not unlawful under the terms of the Working Time Regulations. A number of categories were applied by the EAT. It was stated that "the normal contractual arrangements, whereby employees are paid, for example, monthly and then make arrangements to take their annual leave and continue to be paid during it, are obviously category 5 contracts." This is the category which most closely fits the situation of full-time teachers. As with all teachers, in the applicant's case holidays are taken during the school holidays. The calculation of a teacher's pay allows for 195 working days of which 190 days are days on which the teacher may be required to teach. This calculation allows for teachers taking their annual leave during school closure periods. The applicant is required to take his holidays during the school holidays and he does not work for the respondent in the school closure periods. The calculation of salary for a full-time teacher includes time for preparation, marking, planning, annual leave and bank holidays.

(h) The applicant is currently employed in accordance with the Education (School Teachers Pay and Conditions) (No.2) Order 2003. The applicant is employed on the same basis as all teachers in the maintained sector in England and Wales. The difference between the applicant and a full-time teacher is that he is paid an hourly rate which is calculated by reference to a School Teachers Pay and Conditions Document 1987 which was provided for the National Employers Organisation and recommended a divisor of 1000.

(i) The calculation using a 1,000 divisor means that the applicant is paid at a higher rate than comparable full-time teachers for whom a 1265 divisor is used. The respond stated that in the academic year 2002/2003 the applicant worked for 65.8% of an equivalent full-time teachers hours but was paid 82.9% the comparable full-time salary. The calculation makes it clear that as the full-time requirement is 195 working days and teachers are not required to work during school closure periods, a full-time salary includes holiday pay. As the applicant is paid a proportion of a full-time teachers salary, his pay includes an increment for holiday pay."

49. The Tribunal's conclusion is in paragraph 6 and it reads very concisely, in the light of those findings, as follows:

"The Working Time Regulations are not intended to make contracts of this nature unworkable. The applicant is employed on the same terms as all teachers albeit on a proportional basis. His pay includes an element for annual leave even though this is not specifically itemised in his written particulars. The Teachers Pay and Conditions Document includes a calculation which sets out the basis on which pay is determined which includes an element of holiday pay."

50. The Applicant in his Notice of Appeal and in his written submissions contends that there is no provision in his contract making clear that holiday pay is provided for, over and above his basic rate. He accepts that if he had been told at any stage, on a contractual basis, not only that his salary was arrived at by reference to one thousandth of the annual salary for a basic scale teacher, which he appreciated, but that his salary, so calculated, included a provision for holiday pay, over and above his payment for time worked, then he would have understood. But he submits such was not the case.
51. Mr Wiggins relied on the precise words of the guidelines in paragraph 37 of Marshalls Clay, namely, and in essence, (b):

"The allocation of the percentage or amount to holiday pay must be clearly identified in the contract, and preferably also in the payslip."

If such were a fundamental condition, his contract did not comply with it.

52. We are entirely satisfied that the Tribunal was entitled to reach the conclusion it did. As the Tribunal records, his own draft Statement of Particulars recognized the incorporation into his contract of the School Teachers Pay and Conditions Document (STPCD), which was called in argument, and we have no doubt is regularly called, the "Blue Book", and which has, it is common ground, remained, in material respects, unchanged since prior to 1994. At page 79 of our bundle, that is page 1 of the Blue Book, which reads:

"This Document contains provisions relating to the statutory conditions of employment of school teachers in England and Wales and has been prepared by the Secretary of State for Education and Skills in anticipation of an order being made by him under section 122 of the Education Act 2002 ("the Act"). [That Order was, in due course made]. That Order refers to this Document and directs that its provisions shall have effect in accordance with it pursuant to section 124(3) of the Act."

53. At paragraph 42.1 of the Blue Book, it was provided, under the heading "Unattached teachers":

"The remuneration of an unattached teacher shall be determined in accordance with whichever provisions of this Document the relevant body consider appropriate in the circumstances of the case…"

The relevant document governing negotiations and, in due course, agreements, to which the Respondent council was party, was a document agreed, as we understand it, between relevant employers' associations and unions, called the Burgundy Book. That too has been in existence since 1987. It is also called, confusingly, the School Teachers Pay and Conditions Document, but we find it preferable to use the nomenclature of Burgundy Book, in order to distinguish it from the Blue Book, and the document we have is dated October 1987.

54. The Blue Book makes express provisions which, inter alia, at paragraphs 44 and 64, justify the conclusions which the Employment Tribunal reached, and the central point, so far as we are concerned, is that the individual contract of employment of the Applicant, as was accepted by the Applicant in his own draft Particulars and as has been found by the Employment Tribunal in relation to the Respondent's draft, incorporates, by reference, the provisions of the Blue Book, and through the Blue Book, the Burgundy Book.
55. Even though, therefore, there is not an express provision in his individual contract, which in any event for a good deal of his employment he did not have in writing, we are satisfied that there is, incorporated, sufficient to show not only what the salary entitlement is of an unattached teacher, such as the Applicant, but, in the circumstances more important, what the salary and holiday entitlement is of a full-time teacher, by reference to whose salary the unattached teachers' salary or remuneration is calculated.
56. The result is that the remuneration of an unattached teacher is calculated on an hourly rate, and the unattached teacher, such as the Applicant, is paid one thousandth of the annual salary of a full-time basic scale teacher: the salary of the full-time teacher is arrived at, as is clear from the Blue Book and the Burgundy Book, by allowing for 195 days work, of which 190 has to be actual teaching work, out of 365 days a year, ignoring questions of Christmas and such like. The pay for the full-time teacher thus allows for 170 days of holiday, which is of course considerably more than the statutory requirement of four weeks. That is the basis of remuneration for full-time teachers, who are thus paid a rate which remunerates both for their 195 days for time worked, and their 170 days for time not worked; and the Applicant is paid on a straight proportion of that very same pay, namely one thousandth. He either knew that, and it is noteworthy that he refers to one thousandth himself in his own draft, or he was enabled to find it out by virtue of the incorporation of the relevant documents into his own contract of employment; and consequently we are entirely satisfied that there was a provision for rolled-up holiday pay incorporated into his contract of employment, and that the percentage or amount, although not specifically identified in the contract, could be calculated.
57. Mr Bowers QC has supplied us with a document showing how, if anyone ever wished to calculate it, although we have little doubt that it would be an unlikely event in which such should be required, a teacher such as the Applicant would be able to work out not only what he or she was being paid for the 170/365^ths holiday proportion, but, in fact, in respect of the four weeks out of those 170 days which are the basic statutory entitlement.
58. We are satisfied that both the principles of enforcement of paid holidays and the guidelines of the Marshalls Clay exception to any ouster of rolled-up holiday pay are entirely satisfied in this case. The Applicant knew when his holidays were, namely that they must be
    

taken during the school closures, he knew, or was enabled to satisfy himself through provisions incorporated into his contract, that he was in fact being paid in respect of that period as an element in his hourly rate; and by application of our new guideline, which, it is common ground between the parties, we are entitled to operate in this case, we are satisfied that this case complied with it.

59. We do not need to enter into the dispute between the parties, which appears to us to be entirely collateral, as to whether, as indeed the Tribunal found, this Applicant is better off than full-time teachers, because his hourly rate is being calculated on the basis of one thousandth, as opposed to one 1265^th or whether, as he would assert, although the point does not appear to have been taken below, he was in some way disadvantaged, because in practice he is only ever able to work, in a year, 950 of those 1000 notional hours.
60. As we have indicated, we take no part in that dispute. It does not appear to us to be relevant to the central issue in this case. This was whether the Employment Tribunal erred in concluding that this was a case in which the Respondent was entitled to rely on a rolled-up holiday pay provision, and that the Applicant was not entitled to any further payment, having received his holiday pay through his basic remuneration. We are satisfied it did not. In those circumstances this appeal is dismissed.