Dudley Metropolitan Borough Council v Willetts & Ors (Working Time Regulations), Court of Appeal - United Kingdom Employment Appeal Tribunal, July 31, 2017,  UKEAT 0334_16_3107
|Resolution Date:||July 31, 2017|
|Issuing Organization:||United Kingdom Employment Appeal Tribunal|
|Actores:||Dudley Metropolitan Borough Council v Willetts & Ors (Working Time Regulations)|
Appeal No. UKEAT/0334/16/JOJ
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8AE
At the Tribunal
On 11 July 2017
Judgment Handed down
on 31 July 2017
THE HONOURABLE MRS JUSTICE SIMLER DBE
DUDLEY METROPOLITAN BOROUGH COUNCIL APPELLANT
MR G WILLETTS AND OTHERS RESPONDENTS
Transcript of Proceedings
WORKING TIME REGULATIONS - Holiday Pay
Payment for voluntary overtime that is normally worked is within the scope of Article 7 and therefore within the concept of `normal remuneration' for the purposes of calculating Regulation 13 holiday pay.
It was open to the Employment Tribunal in this case to conclude that the payments in issue were part of normal remuneration for the Claimants, and no error of law was made out.
The appeal was accordingly dismissed.
THE HONOURABLE MRS JUSTICE SIMLER DBE (PRESIDENT)
This appeal raises an important issue affecting the level of holiday pay for workers across the UK: namely, whether payments received in respect of entirely voluntary overtime should be treated as forming part of a worker's ``normal remuneration'' for the purpose of calculating Regulation 13 holiday pay.
The Employment Tribunal (Employment Judge Warren) decided that they should, acknowledging in doing so that it was sailing into ``uncharted waters''. Dudley Metropolitan Borough Council who are the Appellants (but are referred to as the Respondents for ease of reference) challenge that conclusion, submitting that the decisions of the CJEU in two important cases, British Airways Plc v. Williams and Others C-155/10  ICR 847 and Lock v. British Gas Trading Ltd C-539/12  ICR 813 make clear that such payments should not count as ``normal remuneration'' because they lack the necessary intrinsic link to the performance of tasks required under the contract of employment.
The appeal is resisted. The Claimants, who are lead Claimants for a group of 56 employees in the Respondent's Directorate of Place responsible for the repair and improvement of council-owned housing stock, contend on the principal issue, in summary that:
(a) the exclusion of payments for ``voluntary'' work which is normally undertaken is inconsistent with the overriding principal of EU case-law that normal remuneration must be maintained so that pay in respect of annual leave ``corresponds to'' remuneration while working. To exclude these payments results in financial disadvantage and deters (or might deter) workers from taking annual leave;
(b) in any event, there is, if necessary, a link here between the payments and the performance of duties under the contracts because, when working, these Claimants were required to work and perform tasks required by their contracts.
The factual background and the Employment Tribunal's decision
The Claimants are employed in a number of different roles as electricians, plumbers, roofers, storemen, operations officers and ``Quick Response Operatives'' (who carry out general repairs). They each have set contractual hours (for almost all 37 hours per week) which represent their normal working hours. Many have a contractual right to 2-4 hours' overtime. Payment for this is not in dispute.
In addition, they volunteer to perform additional duties which their contracts of employment do not require them to carry out. There is no dispute in that regard that the on-call and additional overtime work is entirely voluntary in the sense that they (the employees) can ``drop on and off the rotas to suit themselves whether day by day, week by week, month by month or permanently'' (paragraph 42 of the judgment). As the Employment Tribunal held, this additional work was ``almost entirely at the whim of the employee, with no right to enforce work on the part of the employer''.
The following elements of pay for the additional voluntary hours worked are in dispute in this case:
(i) Out-of-hours standby pay;
(ii) Call out allowance;
(iii) Voluntary overtime; and
(iv) Mileage or Travel Allowance linked to the above.
The Employment Judge referred to the CJEU's judgment in Williams, concluding that it required her to take into account anything ``required of the claimant under his contract of employment which is intrinsically linked to the performance of the required tasks'', but to leave out of account ``occasional or ancillary costs''. She referred to the Opinion of the Advocate General (also in Williams) that employees should suffer no disadvantage in taking leave and must receive normal or average remuneration so as not to suffer a financial disadvantage. She concluded that regardless of the nature of the work, the test is what normal pay is, having observed that loss of ``pay'' includes ``overtime''. She applied that test to the facts of the case and dealt with each element as follows:
(i) At paragraph 47:
``Out of hours standby - has been paid to each of these claimants over a period of years, at a rate of 1 week in 4 or 1 week in 5, with some variation when they swap on the rota. This may be a case therefore for an average payment to be calculated individually. I am satisfied though that although the work is entirely voluntary it fits within the definition of normal pay, and to include it is remuneration at times of annual leave is entirely within the requirements set out by the CJEU and the Working Time Directive so as not to deter a worker from taking leave. To fail to pay it may deter a worker, who receives it consistently and regularly, from taking leave''
(ii) At paragraph 48:
``Call out allowances - it follows that if a worker is called out, he is being reimbursed for the inconvenience of undertaking out of hours work. Whilst this is a voluntary rota, once on it he is, at the time, required to attend the call out and this is intrinsically linked to the work required of him. For example, he is called out because he is a plumber in his day job, with the council. The payment reflects the antisocial nature of the work. He is on the rota because the respondent allows him to volunteer, an opportunity not available to every employee. This arises out of his employment and the remuneration he receives is `normal'. Normal pay is what is normally received (per Mr. Justice Langstaff - Bear Scotland''
(iii) At paragraphs 50-54:
``Additional voluntary overtime - Some of the employees undertake regular overtime - such that it will fit within the definition of `normal pay', others do not. I apply the Advocate General's definition, which is adopted by the CJEU in Williams.
Mr Woolvin - works regular overtime which borders on the non-guaranteed as it is expected of him under his job description. I consider such to fall within normal pay. This is not unusual or rare, but regular''
Mr Pugh - is subject to voluntary overtime provisions, but he advised the Tribunal that such overtime is very rare, and as such this cannot be said to be part of his normal pay.
Mr Robertson and Mr Willetts are unaffected by this type of voluntary overtime.
Mr Cree works regular Saturdays and is paid overtime. He sees it as an extension to his working week and he is normally paid for it. It falls within normal pay''.
(iv) At paragraph 49:
``Travel allowance There is no doubt that as this is paid at a rate higher than that recognised by the Inland Revenue to be purely to recompense the cost of travel, there is an element of a benefit in kind. It is calculated on the mileage undertaken. There is no suggestion that it is designed to pay for the employee's time, which is reimbursed separately. Part of this is clearly the equivalent of the train ticket, the taxed balance is not. I conclude that such part of the allowance as is the subject of tax as a benefit in kind, is part of the claimant's `normal' pay in accordance with Williams. It is not designed to recompense for expenditure, and it is subject to tax. It is always payable if mileage is undertaken in a private vehicle''
The legislative framework
The Working Time Regulations 1998 (``the WTR'') were made under s.2(2) of the European Communities Act 1972 to implement in domestic law the Working Time Directive, now 2003/88/EC, originally 93/104/EC (``the WTD''). Regulation 13 gives every worker an entitlement to four weeks' annual leave, and together with Regulation 13A, provides so far as relevant:
``13 Entitlement to annual leave
(1) Subject to paragraph (5), a worker is entitled to four weeks' annual leave in each leave year.
13A Entitlement to additional annual leave
(1) Subject to Regulation 26A and paragraphs (3) and (5), a worker is entitled in each leave year to a period of additional leave determined in accordance with paragraph (2).
(2) The period of additional leave to which a worker is entitled under paragraph (1) is -
(e) in any leave year beginning on or after 1 April 2009, 1.6 weeks.
(3) The aggregate entitlement provided for in paragraph (2) and Regulation 12(1) is subject to a maximum of 28 days.''
There is a distinction between the right to annual leave created by Regulation 13 and the right to additional leave created by Regulation 13A. The former implements a right found in the WTD whereas the latter does not and is a purely domestic measure. The significance of the distinction is that any entitlement to increased holiday pay premised on rights derived from EU law applies only to Regulation 13 leave. This appeal is concerned only with payments of holiday pay relating to Regulation 13 holiday entitlement.
The right to annual leave in the WTR is discrete from the right to be paid in respect of such leave. The right to payment is created by Regulation 16(1) which provides:
``A worker is entitled to be paid in respect of annual leave to which he is entitled under Regulation 12 [and Regulation 13A]. at a rate of a week's pay in respect of each week of leave''
Regulation 16(2) specifies a method for calculating the rate of a ``week's pay'' by providing that ss. 221 to 224...
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