Appeal No. EAT/1148/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 20 January 2000

Before
HIS HONOUR JUDGE SMITH QC
MR P R A JACQUES CBE
MR J R RIVERS

EUROSTAFF PERSONNEL LIMITED	APPELLANTS

MR D CHAPMAN	RESPONDENT

Transcript of Proceedings

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellants	MR P PANTELI
(Director)
Eurostaff Personnel Ltd
133 Chase Side
Enfield
Middlesex	

HIS HON JUDGE SMITH QC

1.	This is an application for leave to proceed to a full hearing of an appeal by Eurostaff Personnel Ltd against the decision of an Employment Tribunal by the Chairman sitting alone held at Stratford on 21st June 1999, of which extended reasons were sent to the parties on 4th August 1999, whereby the Employment Tribunal held that the Applicant before them, Mr D Chapman, was entitled to paid leave of 3 weeks per year from 23rd November 1998, under the Working Time Regulations 1998, and that, doing the necessary calculation, which the Chairman did at the end of her decision, he was accordingly entitled to the sum of £722 in respect of 8 days annual leave not taken.  

2.	The Appellants before us are an Employment Agency and the employee, Mr Chapman, was an electrician who had worked for them and been paid by them, having been on their books, as we understand it from the findings of the Employment Tribunal, from 8th July 1996 or thereabouts until 21st May 1999.  The ground of appeal sought to be argued appears to us, and we have had the benefit of courteous submission from Mr Panteli, the Director, to be along the lines that the hourly rate of pay to which Mr Chapman was contractually entitled was already enhanced by 8%, by way of compensation for the absence of paid leave.  At the time when the Working Time Regulations came into force, that was said to be already the position under the contract.  Thus it was contended that the basic rate of £8.80 per hour was enhanced to £9.50 per hour to allow for holiday remuneration.  Accordingly, on the coming into force of the regulations, the Appellants gave the workers, including Mr Chapman, the option of either receiving paid leave in accordance with the regulations, in which case he would be paid at the basic rate of £8.80 per hour, or of continuing to receive the enhanced rate of £9.50 per hour in respect of the entitlement to paid leave in accordance with clause 5(3) of the Appellants terms of engagement which they introduced into effect as at 1st October 1998.
3.	That was how the argument went before us and it was the same argument that was put before the Tribunal apparently, namely that since Mr Chapman had elected to continue to be paid at the enhanced rate and was paid at the enhanced rate, it was submitted that the Appellants had in that way discharged their obligation to him to make payment in respect of annual leave and thus their only outstanding obligation was to ensure, to the best of their ability, in a difficult trade, that Mr Chapman had taken his holiday entitlement for which he had been paid through the enhanced rate.  That was the argument, as we understand it, before us.  That was clearly an argument that was addressed to the Chairman, but the Chairman clearly rejected the argument and she made what we regard as being very important findings of fact in what we consider to be a careful decision.  One fact she found of importance is at the end of paragraph 3:

“it was accepted that there was a written contract at the commencement of employment, but the Tribunal did not have sight of it as neither party had it.  It was agreed that that original contract was silent on the question of holidays”. 

4.	Mr Panteli has submitted to us today that that is not a correct finding of fact, but we cannot go behind that finding of fact.  It was for Mr Panteli to make sure that his evidence was fully and properly presented to the Chairman on the hearing, and we suspect that that may not have been the case but it is too late now to complain and seek to go behind a finding of fact made by the Chairman.  Further the Chairman went on to make important findings of fact in paragraph 4, namely that Mr Chapman’s hourly rate had gradually increased from £8 per hour in July 1996 to £9.50 per hour in August 1998 which the Chairman found was a little above the JIB rate for electricians.  The Chairman found as a fact that it was agreed by both parties that the slightly higher rate, (as she described it), reflected the disadvantages of being self employed as against being an employee.  In particular the Chairman found as a fact that at no time before September 1998 was any mention made of the fact that the slightly higher rate included any sort of enhancement in respect of holidays.  She also found as a fact that there was no percentage calculation by the Appellants before September 1998 to account for holidays.  It is plain in our judgment, with respect to the Appellants, that it is only when the Appellants began to consider their obligations under the new Working Time Regulations that for the first time, on the Chairman’s findings, was it suggested that the hourly rates paid to their workers included an 8% enhancement to compensate for the absence of paid holidays.  Nothing had been agreed previously to that effect, on the findings of the Chairman, and the £9.50 per hour was simply the agreed rate of contractual remuneration with nothing being said about any part of it being attributable in respect of holiday pay.  

5.	In paragraph 6 the Chairman went on to deal with the documents sent out to their workers by the Appellants and she found that they were received by Mr Chapman at the end of September 1998 and that Mr Chapman, having worked out that he would lose a considerable amount of money if he was to have his pay deducted, for that reason proceeded to sign the terms of engagement, including clause 5(3), on 1st October 1998.  She then goes on to describe how subsequently Mr Chapman was advised that the Appellants’ action might be not in accordance with the Working Time Regulations and so Mr Chapman brought his complaint to the Employment Tribunal after his relationship with the Appellants came to an end on 21st May 1999.  The Chairman set out the relevant regulations in paragraph 11 and expressed her conclusions in paragraphs 12 – 15.  In particular, she said at paragraph 13 of her decision:

“The purpose of the Directive was to offer workers minimum protection in respect of Health and Safety matters” 

and then a little later on:

“it would be contrary to the spirit and intention of the Directive and the Regulations for employers and employment agencies simply to say that the hourly pay included an amount for paid holidays.  The intention of the Directive of the Regulations is to give workers an entitlement to paid leave.  This would clearly not be the effect if the Respondents are right in their suggestion that current workers hourly rate simply includes an amount for paid leave.”

And then in paragraph 15 she says:

“It is of some relevance in this case that the Applicant was already working for the Respondents.  He was already receiving £9.50 per hour before the Working Time Regulations came into force.  The option for him to accept a reduced hourly rate and to take the holidays was not one which gave him an entitlement to paid leave”.

6.	In our judgment the Chairman’s conclusions were legitimate, careful conclusions which she was entitled to reach based on the primary facts which she had found and they do not reveal any error of law or any arguable error of law.  On the findings of fact she made, Mr Chapman was already contractually entitled to be paid £9.50 before the Working Time Regulations came into force, without any part of such payment being in respect of paid holiday.  Under the regulations he was entitled to 3 weeks paid leave as it was at that time, at the rate of a week’s pay in respect of each week of leave under regulation 16(1).  Neither of the options offered by the Appellants discharged that obligation to Mr Chapman, in our judgment, on the facts of this case.  Continuing to pay him at £9.50 per hour and attributing 8% of that to paid leave would amount to an unlawful reduction in his contractually agreed pay.  So, equally, would unilaterally reducing his hourly rate to £8.80 from £9.50, as a condition of complying with the directive.  The effect of what the Appellants did here, in our judgment, was to seek to get round their obligations under the directive by seeking to make an unlawful deduction from Mr Chapman’s pre-existing contractual entitlement of £9.50 per hour in an impermissible manner by unilaterally attributing 8% of such payment to holiday pay.  In reaching our conclusion we have taken into account regulation 16(5) pursuant to which it is provided in part that:-

“Any contractual remuneration paid to a worker in respect of a period of leave (our emphasis), goes towards discharging any liability of the employer to make payments under this regulation in respect of that period”

7.	In our judgment, on the findings of fact of the Employment Tribunal, the Appellant employers had not assumed any contractual obligation to pay any remuneration to Mr Chapman in respect of a period of leave.  Since there had never been any such agreement between the parties prior to the document signed at the end of September 1998, no part of the £9.50 per hour represented contractual remuneration paid to Mr Chapman in respect of a period of leave.  It is clear from regulation 16(4) that a right to be paid in respect of annual leave under the regulations does not affect any right of a worker to remuneration under his contract.  So that for those reasons, in the light of the findings of fact made by the Chairman in this particular matter, we have concluded that there is no arguable ground of appeal and the application will have to be dismissed.