Annual leave and the law
25 April 2019
This article was featured in the May 2019 issue of the magazine.
Jill Smith MCIPPdip, CIPP policy manager, brings to your attention the decisions in several recent cases
There have been some recent court cases which you may not be aware of that could impact or affect your employer. These affect the carrying forward of leave, the paying of any leftover leave to beneficiaries after the death of an employee, and accrual of annual leave during parental leave.
General overview
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Entitlement – The law that sets the UK annual leave entitlement is the Working Time Regulations 1998 (‘the Regulations’). In simple terms, all workers, except those who are genuinely self-employed, are legally entitled to 5.6 weeks’ paid holiday per year. An individual is generally classed as a worker if he or she has a contract of employment. The 5.6 weeks equates to 28 days of leave per year for someone who works a five-day week. Part-time workers are entitled to the same amount of holiday (pro rata) as full-time colleagues.
Workers are entitled to the following types of annual leave:
- a minimum of four weeks of paid annual leave under the Regulations, often referred to as ‘regulation-13 leave’
- an additional 1.6 weeks paid annual leave under the Regulations, generally known as ‘additional leave’
- any additional entitlement provided for in the relevant agreement, often known as ‘contractual leave’.
Together, regulation-13 leave and additional leave make up ‘statutory leave’, which is usually included in the annual leave entitlement and will be set out in an employee’s written contract. However, legally ‘contractual leave’ means any leave in the contract over and above statutory leave.
There is no legal right to paid public holidays, but the worker’s contract should state if they are to be paid for these holidays. If paid, they can be counted as part of the statutory 5.6 weeks of holiday, but employers can provide them in addition, if they so choose.
- Accrual – As soon as a person starts working, he or she will begin to accrue leave. The holiday entitlement is not affected by maternity, paternity or adoption leave. The employee still builds up or accrues holiday over these periods.
Gov.uk has a holiday entitlement calculator to help work out what annual leave is due if an employee starts part-way through the year and what leave someone has left if the employment is terminated (https://bit.ly/1picPiR).
Carrying forward annual leave
Case law dictates that a worker’s entitlement to holiday pay will continue to accrue during sick leave, regardless of whether this is paid or unpaid. If a worker is unable to take their annual leave in their current leave year because of sickness, they should be allowed to carry that annual leave over until they are able to take it, or they may choose to specify a period where they are sick but still wish to be paid annual leave at their usual annual leave rate. An employer must allow a worker to carry over a maximum of 20 of their 28 days of leave entitlement if the worker couldn’t take annual leave because they were off sick.
There have been several high-profile decisions on the relationship between holiday rights and sickness over the years that have helped to bring us where we are today with these decisions.
In Plumb v Duncan Print Group Ltd, Mr Plumb was on sick leave from April 2010 until February 2014 when his employment was terminated. He asked to take his accrued leave in the summer of 2013, but his employer granted him only the 2013–14 entitlement and refused the entitlement for the previous leave years (2010–11, 2011–12 and 2012–13).
Mr Plumb took his claim for payment in lieu for three years’ untaken leave to an Employment Tribunal, which rejected his claim on the basis that he had not proved that he was unable to take annual leave because of his medical condition.
On appeal, the Employment Appeal Tribunal, however, ruled that the ET was wrong to require proof that his medical condition prevented him from taking annual leave. The EAT noted that the Working Time Directive did not require leave to be carried over indefinitely and ruled that regulation 13(9) of the Regulation “was to be read as permitting a worker to take annual leave within eighteen months of the end of the leave year in which it was accrued”. Accordingly, it allowed Mr Plumb’s claim for pay for untaken leave in 2012–13 and did not allow his claim for the previous leave years.
Accrual during parental leave
Parental leave (which is not to be confused this with shared parental leave or paternity leave) is an unpaid right accorded to parents of children who are under the age of eighteen that allows the parent to take up to eighteen weeks, unpaid (although individual contractual arrangements may offer pay during parental leave). Employees who have been employed continuously for twelve months by their employer are entitled to parental leave.
Importantly, the parental leave provisions offer protection to an employee who takes parental leave, or who seeks to take parental leave. As per guidance (see www.gov.uk/parental-leave) an employee’s employment rights (like the right to pay, holidays and returning to a job) are protected during parental leave. However, the European Court of Justice (ECJ) held in Tribunalul Botosani v Dicu that annual leave may not accrue during parental leave, when the contract of employment is suspended.
Ms Dicu, a judge in the regional court of Botosani, Romania was entitled to 35 days’ paid annual leave. Having been absent from work on maternity leave from late 2014 to early 2015, she opted to take parental leave from 4 February 2015 until 16 September 2015. She then extended her period of absence to 17 October by taking thirty days of annual leave.
The ECJ considered the Working Time Directive and Parental Leave Directive. In some areas, the right to annual leave presupposes that the worker was at work, but for others such as sick leave or maternity leave it doesn’t.
The Parental Leave Directive enables member states to define the status of the employment contract during periods of parental leave, and in Romania the contract was suspended. The result of this suspension is that absence on parental leave is not considered as a period of ‘actual work’ for the purpose of determining paid annual leave entitlement. Therefore, the ECJ held that parental leave was not a period of work for the purposes of the Working Time Directive.
The decision is not one which will change the statutory position in the UK; as the Maternity and Parental Leave Regulations 1999 state that the employment contract will continue during parental leave. This case may, however, be relevant in some situations, such as where an employee is to be absent from work on a career break or sabbatical.
Untaken annual leave on death of worker
In adjoined cases, Stadt Wuppertal v Bauer and Willmeroth v Broßonn, the ECJ had to decide whether the widows of the deceased workers were entitled to financial compensation in lieu of paid annual leave not taken by the workers.
The ECJ confirmed that, under European Union (EU) law, a worker’s right to paid annual leave does not lapse on his or her death. The reason for which the employment relationship is terminated is not relevant as regards the entitlement to an allowance in lieu. Therefore, the legal heirs of a deceased worker can claim an allowance in lieu of the paid annual leave not taken by the worker. If national law prevents that happening, heirs can rely directly on EU law against both public and private sector employers.
The ECJ stated that the right to paid annual leave is an essential principle of EU social law and is expressly affirmed as a fundamental right in the Charter of Fundamental Rights of the European Union. For any employers who are in doubt, the ECJ decision makes it crystal clear that they must pay accrued holiday pay to the estate of a worker who has died.
Summary
In October 2018, the Department for Business, Energy and Industrial Strategy confirmed to the CIPP that more detailed technical guidance for calculating holiday pay would shortly be published on GOV.UK. We know that this is currently being drafted.
Most of these cases have come out of the ECJ so it will be interesting to see what happens when the UK leaves the EU, whether we have a deal or not as to whether the ECJ will continue to have an effect on the right to holiday pay.