Holiday pay

* Holiday pay averaged over only 48 weeks of the year amounted to a reduction in pay and was in breach of the Working Time Regulations.

The facts

British Airways (BA) staff were paid holiday pay in accordance with an agreement, negotiated in 1975, that calculated their total basic and shift pay over 48 weeks (presumed at that time to be the number of weeks worked every year) and averaged it out to give a consistent amount over the 52 weeks of the year.

The agreement was lawful at the time, but the workers argued that, once the Working Time Regulations 1998 (WTR) began to apply to BA, the effect of the agreement was to deprive them of their statutory holiday entitlement.

The ruling

The Employment Appeal Tribunal held that, as in cases of "rolled-up" holiday pay, there must be an addition to the usual contractual rate to pay specifically for holidays if payment for holidays is to be included in payment made for the rest of the year. There can be no reduction in pay for days worked in order to pay for the statutory 20 days' holiday under the WTR.

Because payment had only been averaged over 48 weeks of the year and not 52, workers had lost out on payment for those four weeks and BA was in breach of the WTR.

British Airways v Noble and Forde UKEAT/0009/05