Roll up, roll up

The issue of rolled-up holiday pay has been the subject of a number of recent cases, but in Marshalls Clay Products v Caulfield (LELR 82), the Court of Appeal decided that it was legal. Marshalls and a further case Robinson-Steel v RF Retails Services Ltd have, however, now been referred to the European Court of Justice (see LELR 91).

So when the claimants in Smith v A J Morrisroes & Sons (along with a number of other conjoined appeals) raised more questions about holiday pay, the employment appeal tribunal (EAT) had to tread more carefully. It decided to deal only with the Marshalls Clay aspects of the appeals, and make no award in Smith until after the Ainsworth case concerning the timing and procedure for claims for holiday pay was heard this month (February 2005).

It also clarified the Court of Appeal's earlier guidance (see box below).

What was Mr Smith's complaint?

Mr Smith worked as a subcontractor from August 1999 until April 2003. Under the terms of his original contract, he was paid £150 per day but with no entitlement to holiday pay.

In late 2002 he was asked to sign a new contract, giving him 20 days' statutory holiday but at a daily rate of only £138 per day, with £12 held back as holiday pay.

Mr Smith refused to sign the new contract, but his employer continued to deduct holiday pay until he left in April 2003. This deduction was clearly marked on his pay slips. The tribunal decided that this was not a unilateral change and was in accordance with the guidance set out in Marshalls Clay.

The EAT, however, did not agree and said that the new arrangements did not satisfy the Marshalls Clay exemption from the regulations. It therefore allowed his appeal.

What was Mr Byrne's complaint?

Mr Byrne started work in June 2002. He claimed he was verbally engaged on 19 June at a rate of £140 per day, but was given a contract the next day which said that his statutory holiday pay entitlement would be added to his hourly rate, giving a total daily rate of £140.

The tribunal found in his favour because it decided that the contractual provision did not represent a true addition to the daily rate and did not therefore satisfy the Marshalls Clay criteria. The EAT agreed.

What was Mr Wiggins' complaint?

Mr Wiggins was an 'unattached teacher' working for the county council on the same terms as permanent teachers, apart from the fact that his pay was calculated on an hourly rate. Mr Wiggins argued that he was not told that holiday pay was provided for over and above his basic rate. Because this was not made clear in his contract or payslip, he said that the arrangements laid down by the county council did not comply with the Marshalls Clay guidelines.

However, both the tribunal and the EAT disagreed. Even though there was no express provision in his individual contract, Mr Wiggins knew that full-time teachers' terms and conditions were incorporated into his contract. There was also a document that allowed teachers to work out what they were paid for school holidays, and specifically the 20 days' basic statutory entitlement.