Employment LawTerms of employment

Holiday Entitlement – Enhanced Protection in New Court Decision

holidays - sunglases on the beachThe entitlement to holidays and pay has been given extended protection by the recent decision of the European Court of Justice.   The Court restated the basic principles and has made it clear that neither employers not States have authority to diminish the right to paid holidays.

Which Employers Will Face Higher Costs?

Many employers provide the appropriate holiday entitlement and pay to their staff and workers.  However, some place obstacles in the way of staff taking leave in order to discourage them or managers fail to understand fully their duties as an employer.  The Court has made it clear that an employer can no longer make the following type of excuses for failure to allow holidays and/or to pay for holidays taken:

  • wrong belief as to holiday entitlement of an individual due to his employment status;
  • entitlement to holiday can not be carried over to the next leave year except in cases of illness;
  • the employee was not made aware in advance of his right to be paid for holidays;
  • individuals are discouraged from taking holidays which are legally enforceable.

Whether because of the above or another unacceptable denial of the entitlement, the employer will have to face the consequences of not allowing a holiday or failing to pay for it.   Such employers will face additional costs as the Court has extended the protection.

Extension of Holiday Protection

If an employer refuses to allow holiday or only give unpaid leave as a means to discourage the individual from using his legal entitlement, the individual will be regarded as unable to take the leave due to circumstances beyond his control.  In that case, the individual will be able to carry over his leave.  He will also be entitled to accumulate such leave until his contract comes to an end.  As the Court determined, “it must be noted that any practice or omission of an employer that may potentially deter a worker from taking his annual leave is equally incompatible with the purpose of the right to paid annual leave ”

Employers do not have the right to separate the two components of statutory holidays i.e actual time of and pay for that time off.   The Court stressed that a worker must know in advance of taking holiday that he will be paid for it.  It is not acceptable to allow the holiday but deny payment and leave the individual to fight for the right to payment.  Another way of viewing this is that it is not legally acceptable for a worker to have to take holiday to discover whether he will be paid for it.

What Holidays Are Affected?

The extended protection apply to 20 days of holiday (i.e. 4 weeks) as European Law only provides for 20 days.  Hence, the protection only extends to 20 days of holiday in the UK and not the full 5.6 weeks statutory mininum for UK holidays.

Neither does the protection cover situattions in which the individual of his own free will decides not to take his holiday entitlement.  However, employers should encourage all workers to take their holiday as the right to paid holidays comes under the European Health and Safety Directives.

As the Court indicated this entitlement, “may not be interpreted restrictively.  Indeed, if it were to be accepted, in that context, that the worker’s acquired entitlement to paid annual leave could be extinguished, that would amount to validating conduct by which an employer was unjustly enriched to the detriment of the very purpose of that directive, which is that there should be due regard for workers’ health.”

Protection Against the State and Employers

The Court also made it clear that States are not free to pass regulations that limit the right to carry over and accumulate the entitlement to holidays and pay.  The Court recognised that the European Articles provide some scope for balancing the interests of the employer and workers  by placing a limit on the periodin which carry over is allowed.  However, that would not be applied in cases in which the the worker was being discouraged from taking paid leave.

The decison throws doubt over earlier UK decisions and regulations limiting the period over which claims maya be made for arrears of holiday pay.  The judgement also opens up the potential for workers to make claims for holiday pay going back to when the European legislation was introduced

Is there room to circumvent the judgement?  The Court appeared determined to limit such gamesmanship in the way it explained its judgement.  Another factor is that a wider definition of a worker applies when considering issues such as holiday pay etc..  That definition catches most forms of ’employment’ and it is likely that many workers , not just employees, would be covered.

Will You Clear This Hurdle?

Will you run this race and clear the hurdle or will the hurdle be your downfall?

Clear policies on holiday entitlement and pay are useful but it is translating those into effective action by supervisors and managers.  It pays to talk to those staff to assess how they apply the policies in practice and how does that differ in practice when the operation is under pressure as that is when attempts to persuade individuals not to take their holidays will tend to arise.

Source:  King v The Sash Window Workshop CJEU 2017

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