Rolled up Holiday Pay

The Court of Appeal has, for the first time, considered the thorny issue of 'rolled-up' holiday pay.

In an astonishingly robust and clear judgment, Laws LJ held in the conjoined appeals of Clarke v Staddon and Caulfield v Marshalls Clay Products (see my bulletin of 4/8/03 for the EAT decision) that 'rolled-up' holiday pay complies with the EU Working Time Directive. He examined the policy behind the Directive and relied heavily on the fact that the Directive does not state that the payment has to be received at the time the holiday is taken.

He then asked the question: does rolling-up holiday pay undermine or negate the relevant article of the EU Working Time Directive, and held that it did not. He also held that since the Working Time Regulations 1998 were enacted to implement the Directive, if they said anything different, they were ultra vires. However, he went to hold that the WTR 1998 did allow for rolled-up holiday pay.

But he said it was unsatisfactory that there were two inconsistent decisions; one from the English Court of Appeal and the other from the Scottish Court of Session (in MPB Structures v Munro - see my bulletin of 8/4/03). As a result, he thought that the issue should be referred to the European Court of Justice, and adjourned the hearing to enable Counsel to suggest a draft form of reference. He made it clear that the reference would (if possible) be joined with the reference from the Leeds employment tribunal on the same point (see my bulletin 17/3/04).

Also of significance: he held (in a passage I have some reservations over) that the EAT sitting in England is not bound by the decisions of the Scottish Court of Session. This must be doubtful because the EAT - whether sitting in England or Scotland - is one statutory body. It cannot be right that the same court may, or may not, be bound by decisions of higher courts depending on where the Applicant lives.