Holidays and holiday pay -­ what is the latest?

Introduction

Hello and welcome to the latest in our series of employment videos. My name’s Paul Griffin and I’m Head of the Norton Rose Fulbright Employment team in London.

The statutory right to paid holiday provided by the Working Time Regulations 1998 has led to much litigation over the years. Most recently, the case law has concerned the question of what should be included in holiday pay. There have also been a number of cases on the relationship between the right to paid holiday and sick leave, and whether holiday not taken whilst on sick leave can be carried forward. In today’s video I’ll be looking at recent decisions in this area.

What should be included in holiday pay?

The first case I’ll be looking at is a recent decision of the employment tribunal on the question of what elements of pay should be included in the calculation of holiday pay.

At the end of last year we summarised the case law on this subject, which decided that certain elements of pay should be included. The key decision was Williams and British Airways which established that workers should receive their “normal remuneration” during periods of statutory holiday derived from the EU Working Time Directive – i.e. the 4 weeks’ holiday provided for by Regulation 13 of the Working Time Regulations.

This decision and subsequent case law made it clear that ”normal remuneration” includes commission payments and payments made in respect of compulsory overtime, as well as attendance allowances, London weighting payments and shift premia. One of the things which remained unclear was whether payments made in respect of purely voluntary overtime – which a worker doesn’t have to work even if asked – should be included in holiday pay.

As reported last year, the Northern Ireland Court of Appeal ruled that voluntary overtime worked with a sufficient degree of regularity, could amount to “normal remuneration” depending on the facts of the case. This decision was not binding on the English tribunals and so the uncertainty remained.

Now, an English employment tribunal, in the recent case of Brettle and Dudley Metropolitan Borough Council, has ruled in line with the Northern Irish Court.

There were a number of claimants in the Brettle case, who each worked different shift patterns and undertook voluntary overtime with differing degrees of regularity. The tribunal considered the existing case law, including the Northern Irish case, and noted in particular that each case will turn on its own facts.

In light of this, and the principle that workers should receive their “normal remuneration” during statutory holiday, the tribunal concluded that for those claimants who worked voluntary overtime regularly, payments in respect of voluntary overtime should have been included in the calculation of holiday pay.

However, in the case of one particular claimant who worked overtime very rarely, voluntary overtime payments could not be said to amount to “normal remuneration”, and so should not be included in the calculation.

As this decision is first instance, it’s not binding on other tribunals but, along with the decision of the Northern Irish Court, it does give a good indication of how future cases may be decided.

Can accrued but untaken holiday be carried over and for how long?

The Working Time Regulations state that holiday must be taken in the leave year in respect of which it’s due. However, following a decision of the European Court, the Court of Appeal held in NHS Leeds and Larner, that the Regulations should be interpreted in line with the Working Time Directive, so that holiday may only be taken in the leave year in respect of which it’s due, unless the worker has been unwilling or unable to take it because he was on sick leave. In addition, if his employment is terminated and some of that accrued leave is still untaken, he should be paid in lieu.

Since then, the European Court has ruled that there is a limit to the length of time an employee on sick leave can carry over untaken statutory holiday – the appropriate period should be significantly longer than a year but the Court didn’t make it clear exactly how long.

More recently, in the case of Plumb and Duncan Print Group, the EAT had to decide whether a worker who hadn’t requested holiday during 3 years of sick leave, should be paid in lieu when his employment was terminated.

The EAT concluded, in light of previous decisions and guidance given by the courts, that workers can only carry forward unused holiday in these circumstances for a maximum period of 18 months. Consequently Mr Plumb was only entitled to holiday pay for the previous holiday year.

This case clarified that accrued statutory holiday not taken because a worker has been on sick leave may be carried forward for a maximum period of 18 months. If not taken by then, it will be lost.

It had been hoped for some time, following the Government consultation published in 2011, that the Working Time Regulations would be amended so that they’re compliant with the Directive. However, in the light of impending Brexit, this seems unlikely in the near future, if at all. That said, for now, the latest court decisions remain law.

Conclusion

This video is intended to give you a summary of some of the recent court decisions on the statutory right to paid holiday. If, however, you would like any further information, or have any questions on any aspects of today’s topic, then please don’t hesitate to contact us.

And, finally, our monthly competition:

Which specific provision of the Working Time Regulations states that holiday must be taken in the leave year in which it’s due?

The first person to email me with the correct answer will receive a bottle of champagne.

Thank you.