Clarke v Frank Staddon Limited; Caulfield and Others v Marshalls Clay Products Limited Court of Appeal [2004] EWCA Civ 422

Holiday pay doubts roll on: The employees in these conjoined appeals all worked shifts. Their holiday pay was incorporated in the hourly rate of pay and was not payable at the time they took their holiday. In both cases, the EAT held that, in principle, rolled-up holiday pay did not breach either the Working Time Regulations 1998 or the Working Time Directive. The employees appealed, arguing that the EAT should have been bound by the Scottish Court of Session decision in Munro v MPB Structures, which said rolled-up holiday pay was unlawful as payment must be made in association with taking of the leave.

The Court of Appeal held that as a matter of law, the EAT and Court of Appeal were not obliged to follow Munro. Further, in these two cases, (unlike Munro) there was a specific agreement about the allocation of a percentage of the agreed rate of pay to holiday pay. To avoid contradictory decisions from the Court of Appeal and the Court of Session on the same point, the Court of Appeal referred the issue to the European Court of Justice (ECJ) and indicated it would like the referral expedited and heard with the Robinson-Steele v R F Retail Services Limited case referred to the ECJ in March 2004 by the Leeds tribunal.

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