Working Time (Amendment) Regulations 2001 SI 2001/3256
Campbell and Smith v Greenwood [2001] IRLR 588
Whitley & District Men's Club v Mackay [2001] IRLR 595

In keeping with tradition, the New Year seems the appropriate time to consider holidays. This month we analyse the annual leave and working time cases on holiday entitlement.

We reported on the landmark victory of the Broadcasting Entertainment Cinematograph and Theatre Union in the European Court of Justice in June last year (LELR Issue 59). BECTU successfully challenged the 13 week qualifying period for the right to paid annual leave.

On 25 October 2001 the government, somewhat sluggishly, implemented the Working Time (Amendment) Regulations to give effect to the BECTU ruling.

With effect from 25 October 2001, all workers from their first date of employment are entitled to four weeks paid holiday every year. Regulation 15A has been added to the Working Time Regulations which provides an accrual system that will apply during the first year of employment and workers only have the right to take as much leave as has accrued at the time they take their holiday - unless of course their employer agrees to be more flexible.

The amount of leave that can be taken in the first year builds up monthly in advance at the rate of one-twelfth of the actual entitlement each month. Where this calculation does not result in an exact number of days' leave, the amount is rounded up to the next half day. So there is still an area of vulnerability in the first month of employment.

The DTI guidance has also been amended to give examples of how Regulation 15A works in practice.

Whitley and District Men's Club v McKay [2001] IRLR 595 considered the extent of the right to accrued and untaken leave on termination of employment.

Regulation 14 of the Working Time Regulations provides that, where a worker's employment is terminated during the course of the leave year, she or he is entitled to payment in respect of accrued, but untaken, holiday. Regulation 13 (3) provides that the payment shall be 'such sum as may be provided for the purposes of the Regulation in a relevant agreement...'. A relevant agreement can include a collective agreement or an individual contract.'

What happens if the 'relevant agreement' provides for no payment at all?

Mr McKay's contract of employment incorporated the terms of a collective agreement which included the term 'no worker shall be entitled to accrued holiday pay if [he] is dismissed for dishonesty...and [he] is so informed by [his] employer at the time of dismissal'.

Before the implementation of the Working Time Regulations this was a fairly standard and perfectly lawful clause in a contract.

Mr McKay was summarily dismissed for dishonesty. On the date of his dismissal he had twenty-six days' outstanding holiday entitlement. The club refused to pay him any sum in respect of accrued holiday pay, relying on the clause in the contract and the Employment Tribunal found that the employer had failed to make a payment in lieu of leave as required by Regulation 14. The employer appealed.

The Employment Appeal Tribunal said that the words 'such sum' in Regulation 14 (3) (a) did not include 'no sum'. The employer had to make some payment in respect of leave entitlement outstanding on termination. This also meant that the provisions of the collective agreement were void because they would have had the effect of ousting the protection of the Working Time Regulations.

In this case the amount of money owed was £1,164.80. A reminder that the amounts involved can be significant.

What the case does not address is the position where a relevant agreement provides for only a nominal sum rather than full pay for the period of leave entitlement. Another interesting feature is that Mr Mackay was compensated for 26 days which would appear to be more than the four week annual leave provided for by the Working Time Regulations 1998.

Who is 'the public'?

In Campbell & Smith Construction Group Ltd v Greenwood the Employment Appeal Tribunal probed contractual rights in holiday entitlement. The issue was the extra public bank holiday granted for the millennium. Mr Greenwood and his colleagues were entitled under their contracts of employment to winter holidays of seven working days plus Christmas Day, Boxing Day and New Year's Day. Was 31 December 1999, which was declared as a public holiday, to be added to the other bank holidays or be treated as a working day? Was Mr Greenwood entitled to a total of ten or eleven days as his winter holiday?

The Employment Tribunal held that as 31 December was a public holiday it ceased to be a working day and the employer had made an unlawful deduction from wages by failing to give Mr Greenwood and his colleagues an extra day's paid holiday. The Employment Appeal Tribunal overturned the decision. They analysed the Tribunal's decision as effectively stating that the employees were entitled to an additional day's paid holiday because of the Government declaration. Unless there was a contractual provision to that effect, the Government declaration did no such thing. Only if the employers had agreed to amend the contract would a right arise. The case begs the question of who 'the public' is when a public holiday is declared if the announcement has no legal effect.

The case is particularly topical because of the forthcoming 'Golden Jubilee Bank Holiday' on 3 June declared by the Government. It seems that Mr Greenwood and his colleagues may be unable to show their loyalty and excitement as the Queen's subjects in celebration of her reign. But whether other workers throughout the country will be able to down tools for the street parties will depend on what their contracts of employment say. It is worth checking the detail of contracts of employment and collective agreements to see. For example, a contract which entitles a worker to, for example, 15 days annual leave in addition to all statutory, bank and public holidays, would give the worker an extra day's paid holiday on 3 June. But if public holidays are not given as paid holiday or if each holiday is listed by name, as in Mr Greenwood's contract, it could be more tricky. A fairly common contractual clause is to provide 20 or 25 days holiday inclusive of statutory and public holidays. It is doubtful whether this type of wording would be interpreted as giving rise to an additional days holiday because of the Golden Jubilee and employer's agreement should perhaps be sought.

Overtime rates and anti-social hours payments could also be affected depending on the precise wording of the contract.

Neither will the interplay between contractual and Working Time Regulation statutory rights help Mr Greenwood Ð the right to 20 days annual leave is inclusive of public holidays unless the contract stipulates otherwise.

Ask first

A number of unreported Employment Tribunal cases have highlighted the need to comply with the detail of the technicalities in asserting holiday rights under the Working Time Regulations 1998. Regulation 30 sets out that a worker may bring a claim to a Tribunal if their request for annual leave is refused. A worker - either directly or through his or her trade union - must therefore request annual leave in accordance with the regulations and have that request refused before bringing a case in the Employment Tribunal. The refusal of leave is the trigger for the claim, rather than spotting the defect in the contract. Unfortunately it means that if an employer is unwilling to negotiate, individual requests and claims are necessary.