Holiday Pay and Allowances

The hearing initially stemmed from a dispute as to whether a meal allowance should have been included in the calculation of statutory holiday for a member of British Airways cabin crew, as the Respondent operated a flat rate meal allowance for cabin crew, which had the aim of saving the burden of handling thousands of receipts a day. Both parties acknowledged that the allowance exceeded the costs incurred.

The tribunal concluded that the meal allowance, or a portion of it, should be included in the calculation of normal pay for holiday pay. The payments were ‘intrinsically linked’ to the performance of duties and the Respondent hadn’t been able to show they were intended to cover occasional or ancillary costs. The EAT decided that the ET (Employment Tribunal) was incorrect in its assertion that the burden was on the Respondent. It was not possible to split the payment into two smaller sums, these being performance-related and expenses. This meant that the tribunal must decide if the Respondent was liable for the whole payment, or none of it. The issue was remitted.

The ET’s initial decision (which pre-dated Police Service of Northern Ireland (PSNI) v Agnew in the Supreme Court) was that any gap of three months between deductions would break the chain of causation (Bear Scotland v Fulton). Based on the Police Service of Northern Ireland (PSNI) v Agnew ruling, the EAT held that this conclusion could not stand.

The EAT remitted the issue as to whether there was a sufficient ‘temporal’ link between those same deductions (also required for them to be regarded as a series) to the tribunal. The EAT did note that when looking at the time-gap issue, tribunals should bear in mind that there will always be gaps in time between periods of holiday pay payments, due to the natural breaks between holidays.

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