In a welcome decision* for film and television production companies, the Court of Appeal has upheld the Employment Appeal Tribunal’s decision in Marshalls Clay Products Limited v Caulfield. In that case, the court analysed the legality of contracts which seek to “roll up” holiday pay (ie having workers’ agreed rates of pay include an element of holiday pay) and found that where certain requirements were complied with, such contracts were permissible (see our August 2003 early warning).
The issue before the Court of Appeal was whether contractual arrangements between employer and worker which provide for “rolled up” holiday pay involve a violation of a worker’s right to be paid for annual leave under Article 7 of the EU Working Time Directive.
The workers in this case were employed as general operators for Marshalls Clay, a business which manufactures clay products for the building trade. The workers worked according to a shift pattern of four days on and then four days off. This pattern of working required particular arrangements to accommodate workers’ holidays and so a collective agreement was entered into between Marshalls Clay and the workers’ union which provided for the rolling up of holiday pay.
The court’s decision was made by reference to the provisions of the Directive but includes reference to the Working Time Regulations 1998 (there being no argument in the case that the regulations do not properly transpose the Directive into English law). The court held that rolled up holiday pay complies both with the Directive and the regulations. It did, however, make a distinction between arrangements which are so obstructive to workers taking holiday that they deny them the right to holiday, and provisions which create a framework within which a worker is able to benefit from the right to holiday. The court also found that there was nothing in the wording of the Directive about the timing of payment for holiday and that, in fact, it may suit some workers to have their holiday money “up front”.
The court expressed dissatisfaction with the existing contradictory decisions of the Court of Appeal and the Scottish Court of Session (MPB Structures v Munro – reported in our early warning of May 2003). It also referred to the recent reference to the European Court of Justice made by the Leeds employment tribunal. It identified the unsatisfactory situation which was likely to occur of the EAT deciding Scottish cases following the Munro decision and the EAT deciding English cases following the decisions of the court in Marshalls. This could lead to conflicting case law. The court decided that it would make its own reference to the ECJ and, if possible, join it with that made by the Leeds tribunal.
Provided that the requirements as set out in the EAT’s decision in Marshalls are complied with, it seems that for the time being production companies can continue using rolled up holiday arrangements (bearing in mind that such arrangements should not in any way obstruct the taking of holiday). However, until there is a definitive decision from the ECJ, the doors are not closed on developments in this area.
* M J CLARKE v FRANK STADDON LTD : (1) J CAULFIELD (2) C CAULDFIELD (3) K V BARNES v MARSHALLS CLAY PRODUCTS LTD (2004) CA (Civ Div) (Judge LJ, Laws LJ, Charles J) 28/4/2004