The Employment Appeal Tribunal (EAT) has considered the issue of a "series of deductions" in De Mello v British Airways.
The EAT held that the decision of the employment tribunal that any gap of three months or more between deductions would break the chain of causation for the purposes of a claim for holiday pay was reached before the Supreme Court's decision in Chief Constable of the Police Service of Northern Ireland v Agnew and so was now incorrect. The EAT also considered the issue of whether a meal allowance should have been included in the calculation of statutory holiday pay.
The claimants were employed by British Airways as cabin crew. Their remuneration involved a number of different allowances, over and above basic pay, and a dispute arose as to which of these allowances should be paid during periods of statutory leave. The tribunal held that a number of allowances, including meal allowances, should have been included within the calculation of holiday pay for statutory leave. The issue of whether all the meal allowances (which were described as "generous"), or only part, should be taken into account was adjourned to a further hearing. The tribunal also considered whether the claimants' claims had been brought in time and considered that it was bound by the EAT's decision in Bear Scotland Ltd v Fulton that a gap between two successive deductions of more than three months would break a "series of deductions".
The EAT considered whether the meal allowance should have been included and remitted the issue to the tribunal for reconsideration. British Airways operated a flat rate meal allowance for cabin crew which both parties acknowledged exceeded the costs incurred. The tribunal had concluded that the meal allowance, or a portion of it, should be included in the calculation of normal pay for holiday pay purposes as the payments were intrinsically linked to the performance of duties. The EAT held that it was the tribunal's job to weigh all the relevant facts and circumstances in order to decide whether a payment was intrinsically linked to performance or made genuinely and exclusively to cover costs. It was not possible to treat a portion of the payment as performance-related and a proportion as expenses; a payment could only be one side of the line or the other.
The EAT also considered the issue of whether the claims had been brought in time. On this point, it held that the tribunal's decision could not stand following the decision in Agnew (where the Supreme Court held that a gap of more than 3 months in a series of deductions from wages does not break that series for the purposes of bringing an unlawful deductions claim). The deductions were "sufficiently similar" to be regarded as a series, as they all related to deductions from holiday pay. The EAT remitted the issue of whether there was a sufficient temporal link between the deductions to the tribunal, but noted that, when looking at the time-gap issue, tribunal should bear in mind that there will always be gaps in time between periods of holiday.
Take note: The decision in Agnew already established that workers bringing claims for underpaid holiday pay no longer have to worry about a gap of three months or more in a series of deductions operating to defeat their claims. While De Mello does not provide any firm guidance as to what will amount to a break in a series of deductions, it does note that there will always be gaps in time between periods of holiday and that tribunals should bear this in mind when deciding whether there is a sufficient temporal link between the deductions. In the meantime it's some consolation to employers that the two-year limit on claims for backdated holiday pay will cap any liabilities to a certain extent.
