For many of us it is hard to imagine a time when there was no statutory entitlement to annual leave, a time when a worker’s right to take holidays (paid or in many cases unpaid) was largely a matter of what had been agreed in their contract. Cast your mind back to 1998, life was so different then – the UK was at odds with Europe (over the Euro), data protection legislation was big news and France had won the World Cup…or maybe not on reflection.
The UK’s Working Time Regulations 1998, implementing the EU Working Time Directive, introduced paid holiday for all workers – initially 20 days or 4 weeks for full-time staff rising to 24 days/4.8 weeks in 1 October 2007 and then 28 days/5.6 weeks from 1 April 2009. The increase came about because some employers included bank holidays as part of the four week entitlement prompting government to make sure that people got their four weeks off on top of bank holidays. This benevolence was all the more remarkable given that government had previously tried to stop the EU introducing a minimum number of paid days off. The basic and additional leave entitlements can cause a headache though. For instance:
- The Working Time Regulations 1998 expressly prohibits the carrying forward of annual leave from one leave year to another, yet a succession of judgments from the European Court of Justice have effectively combined to permit workers (certainly public sector workers) who are prevented from taking annual leave due to sick leave to carry over that leave into a subsequent leave year. However, the amount of leave which can be carried over in such circumstances is limited to the basic entitlement, derived from the EU Working Time Directive, and does not include our domestic, additional entitlement.
- Although the additional entitlement reflects the eight bank holidays in England and Wales, there is no statutory right to take public holidays as paid annual leave: the right to take leave on such days is governed by the express or implied terms of the worker’s contract.
- The distinction also affects how holiday pay is calculated. As a result of two relatively recent ECJ rulings, in respect of workers with normal working hours employers are required to include non-guaranteed overtime, commission and bonuses when calculating holiday pay (workers without normal working hours and pieceworkers should have their holiday pay calculated based on average weekly remuneration, including commission and similar payments, over the previous 12 complete weeks). However, again, this only applies to the calculation of holiday pay reflecting the basic entitlement.
It is also increasingly important for employers to remember that the right to paid holiday is enjoyed by workers and not just employees. As the current trend of judicial interpretation of the tests for employment status leads to more ostensibly self-employed contractors being classified as workers – the definition of a worker under the Employment Rights Act 1996 being the same under the Working Time Regulations 1998 – for employers whose contracts do not reflect the reality of the relationship there are real risks of back pay holiday claims.
If all this leaves you slightly confused, I sympathise – it’s not what anyone would describe as blue-sky-thinking. Maybe it’s time for a holiday? And when you get back, if you need any help, just let me know.
Paul Clark, Head of Employment, pclark@jacksons-law.com, 0191 206 9626
