Bamsey v Albon Engineering & Manufacturing Plc

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Auld,Lord Justice May,Lord Justice Jacob
Judgment Date25 March 2004
Neutral Citation[2004] EWCA Civ 359
Date25 March 2004
Docket NumberCase No:A1/2003/0817

[2004] EWCA Civ 359

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

Royal Courts of Justice

Strand,

London, WC2A 2LL

Before:

Lord Justice Auld

Lord Justice May and

Lord Justice Jacob

Case No:A1/2003/0817

Between:
D. Bamsey & Ors
Appellant
and
Albon Engineering & Manufacturing Plc
Respondent

Mr. John Hendy QC and Mr. Oliver Segal (instructed by Thompsons) for the Appellants

Mr. Thomas Linden (instructed by The Treasury solicitor) as Advocate to the Court

Lord Justice Auld
1

This appeal concerns:

1) the meaning of the term "normal working hours" in sections 221–224 of the Employment Rights Act 1996 ("the Act") as used for the calculation of "a week's pay" of an employee for the purposes of the Act;

2) the meaning of "normal working hours" for the purpose of calculating an employee's entitlement to payment under regulation 16 of the Working Time Regulations 1998 ("the Regulations") for the four weeks annual leave to which he is entitled under regulation 13 of the Regulations;

3) the effect of that meaning on "a week's pay" of an employee whose contract of employment requires, but does not entitle him, to work overtime in addition to his basic contractual hours, more particularly whether it is capable of resulting in him receiving significantly less by way of pay for annual leave than when he was working; and

4) the extent to which, if at all, the meaning of the term "normal working hours" insofar as it bears on the calculation of "a week's pay" for the purpose of determining his annual leave pay under regulation 16, should be purposively construed to give it a meaning that it might not otherwise have so as to conform to the main purpose of Article 7 of Council Directive 92/104, the Working Time Directive ("the Directive"), which the Regulations implement.

2

The appeal is by Mr. D Bamsey and others, more particularly the test case appellant, Mr. T Sturge, against a decision of the Employment Appeal Tribunal ("the EAT") on 27 th March 2002, upholding the decision of an Employment Tribunal, that they were only entitled to receive pay for each week of annual leave on the basis that the "normal working hours" going to the calculation of "a week's pay" were the basic hours set by his contract of employment and did not include overtime working.

The facts

3

The material facts of Mr. Sturge's case were as follows. He was employed by the respondent and worked under a contract that entitled him to a "basic" working week of 39 hours, with substantial compulsory, but non-guaranteed, "overtime". Apart from occasional variations, the respondent had in fact required him to work, and he worked, a regular weekly shift pattern of four twelve hour days and one ten hour day, a 58 hour working week. Over the twelve weeks before the holiday period in question, Mr. Sturge had averaged 60 hours work, earning nearly £330 a week. However, the respondent paid him for a period of annual leave on the basis only of his basic 39-hour week, producing just short of £200 per week, namely less than two thirds of his average weekly wage in the previous 12 weeks. Mr Sturge maintains that he should have been paid over the period of annual leave at the same rate as he averaged, with overtime, while at work.

The law

The 1996 Act

4

The 1996 Act is a consolidating Act dealing with many aspects of employment. Sections 220 to 224, which are in Chapter II, headed "A Week's Pay", of Part XIV of the Act, all of which is devoted to Interpretation, provide how "a week's pay" is to be calculated "for the purposes of [the]…Act" according to whether there are, and by reference to, "normal working hours" under a contract of employment. There are several contexts in the Act to which the concept of "a week's pay" is relevant. In so providing, the Act reproduces, or closely reproduces provisions introduced for the first time nearly 40 years ago in the Contracts of Employment Act 1963, Sch. 2 and subsequently re-enacted in the Employment Protections (Consolidation) Act 1978, Sch 14, Pt 1. Central to the concept of a week's pay for the purposes of the Act, is the distinction between cases in which there are "normal working hours", namely those in which the contract of employment expressly or by implication requires the employee to work a given number of hours each week, and those where there are not.

5

The distinction is specifically drawn in a number of provisions in the Act, e.g. in sections 30, 56, 62 and 63B, but most notably in sections 88 and 89 which concern calculation respectively of "normal working hours" or "a week's pay" on termination of employment on notice. Sections 220–224, in their interpretative role, clearly draw the distinction. Sections 221, 222 and 223 provide a means of calculation of a week's pay in cases of employment with "normal working hours", and section 224 provides a means where there are not. But those provisions, while prescribing how "a week's pay" shall be calculated by reference, inter alia, to "normal working hours", do not of themselves define the latter. The only place to find such definition is in section 234; just as the only place to find the definition of the word "week" is in section 235.

6

Before attempting any further account of the scheme of these provisions, I had better set them out, so far as material:

"220 Introductory

"The amount of a week's pay of an employee shall be calculated for the purposes of this Act in accordance with this Chapter." [my emphasis]

221 General

(1) This section and sections 222 and 223 apply where there are normal working hours for the employee when employed under the contract of employment in force on the calculation date.

(2) Subject to section 222, if the employee's remuneration for employment in normal working hours (whether by the hour or week or other period) does not vary with the amount of work done in the period, the amount of a week's pay is the amount which is payable by the employer under the contract of employment in force on the calculation date if the employee works throughout his normal working hours in a week.

(3) Subject to section 222, if the employee's remuneration for employment in normal working hours (whether by the hour or week or other period) does vary with the amount of work done in the period, the amount of a week's pay is the amount of remuneration for the number of normal working hours in a week calculated at the average hourly rate of remuneration payable by the employer to the employee in respect of the period of twelve weeks ending –

(a) where the calculation date is the last day of a week, with that week; and

b) otherwise with the last complete week before the calculation date.

…."

"222 Remuneration varying according to time of work

(1) This section applies if the employee is required under the contract of employment in force on the calculation date to work during normal working hours on days of the week, or at times of the day, which differ from week to week or over a longer period so that the remuneration payable for, or apportionable to, any week varies according to the incidence of those days or times.

(2) The amount of a week's pay is the amount of remuneration for the average number of weekly normal working hours at the average rate of remuneration.

(3) For the purposes of subsection (2) –

(a) the average number of weekly hours is calculated by dividing by twelve the total number of the employee's normal working hours during the relevant period of twelve weeks; and

(b) the average hourly rate of remuneration is the average hourly rate of remuneration payable by the employer to the employee in respect of the relevant period of twelve weeks.

223 Supplementary

"For the purposes of sections 221 and 222, in arriving at the average hourly rate of remuneration, only –

(a) the hours when the employee was working, and

(b) the remuneration payable for, or apportionable to, those shall be brought in.

(2) If for any of the twelve weeks mentioned in sections 221 and 222 no remuneration within subsection (1) (b) was payable by the employer to the employee, account shall be taken of remuneration in earlier weeks so as to bring up to twelve the number of weeks of which account is taken.

(3) Where

(a) in arriving at the average hourly rate of remuneration, account has to be taken of remuneration payable for, or apportionable to, work done in hours other than normal working hours, and

(b) the amount of that remuneration was greater than it would have been if the work had been done in normal working hours (or, in a case within section 234(3), in normal working falling within the number if hours without overtime), account shall be taken of that remuneration as if the work had been done in such hours and the amount of that remuneration had been reduced accordingly.

224 Employments with no normal working hours

(1) This section applies where there are no normal working hours for the employee when employed under the contract of employment in force on the calculation date

(2) The amount of a week's pay is the amount of the employee's average weekly remuneration in the period of twelve weeks ending –

(a) where the calculation date is the last day of a week, with that week, and

(b) otherwise, with the last complete week before the calculation date.

(3) In arriving at the average weekly remuneration no account shall be taken of a week in which no remuneration was payable by the employer to the employee and remuneration in earlier weeks shall be brought in so as to bring up to twelve the number of weeks of which account is taken. …"

7

As I have said, none of those provisions, though concerned in various ways with "normal working hours", contains any definition...

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