Calculating a Day’s Pay
If someone earns an annual salary – how do you work out a ‘day’s pay’? You might think that this would be a straightforward question – but far from it. Most employment law deals with a week’s pay or – in the case of paid annual leave under the Working Time Regulations – a proportion of a week. To think about a day’s pay you have to refer to the Apportionment Act 1870 – and even then, the answer is not entirely clear.
The case of Hartley and others v King Edward VI College, concerned teachers at a sixth form college who took industrial action. That meant that the employer was entitled to make a deduction from their pay to cover the work they had refused to do. The employer worked on the basis that there were 260 working days in the year (52 weeks, with five working days a week, including paid holidays) and made deductions for each day amounting to 1/260 of each teacher’s annual salary. The teachers argued however that the Apportionment Act provides that any payment made by way of salary accrues on a day-by-day basis. This meant that the deduction should be based on 1/365 of their annual salary. The Court of Appeal favoured the 1/260 approach on the basis that the Apportionment Act did not require the day-by-day accrual of salary by an exactly equal amount each day –and it was clear that the teachers were employed to work for 260 days in a year.
The Supreme Court disagreed. The proper way to apply the Apportionment Act was to assume an equal accrual of salary on a day-by-day basis and the best way of calculating that was to divide the annual salary by 365. It was open, however, to employers and employees to agree on a different rate of accrual (or on no daily accrual at all) but the Supreme Court did not think that merely setting out a five-day working week in the contract was enough to show that there was such an agreement – particularly since the teachers in this case regularly had to work at weekends in order to prepare for lessons and mark work. The teachers’ claims were upheld.
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