Current legal provision – Working Time Regulations

Employees are legally entitled to 28 days paid holiday per year. An employer can include bank holidays as part of statutory annual leave as set out in the Working Time Regulations 1998 (WTR).

WTR also requires that a workers working time (including all overtime) must not exceed 48 per week, however, there is an option for workers to voluntarily opt-out. The fundamental principle of the WTR is to safeguard health and safety of working individuals.

In relation to holiday, there is no specific legal obligation on the employer to ensure an employee takes their statutory holiday. However, regulation 15 of the WTR allows an employer to require workers to take (or not to take) annual leave on specific days.

Background

Mr Shimizu (Mr S) was employed by the Max-Planck-Gesellschaft zur Förderung der Wissenschaften (M-P-G). The employer encouraged Mr S to take his remaining annual leave two months before the end of his employment. Mr S took two days off and requested the remaining annual leave balance as payment of an allowance in lieu.

M-P-G refused his request on a number of grounds, such as the Working Time Directive (The EU version of WTR) states that such payments can only be made on the premise that the worker was unable to take their annual leave entitlement for reasons beyond their power.

According to Article 7 of the WTD, entitlement to payment for any untaken annual leave exists only upon termination or when the worker has not taken all of their annual leave entitlement when termination occurred.

Ruling

The European Court of Justice (ECJ) decided that the right to paid annual leave cannot be lost if an employee did not apply for it and the employer must be prevented from restricting worker annual leave rights.

Any process that might potentially ignore worker annual leave rights or discourage them from taking their annual leave is against the right to paid leave.

The employer is required to demonstrate that the worker is given the opportunity to take paid annual leave by informing workers accurately and in good time, that if their leave in not taken the remaining annual leave will get lost:

  • at the end of annual leave year; or
  • at the end of or carry over period; or
  • upon termination of employment

However, if the employer cannot demonstrate that it has exercised all due diligence to enable the worker to take all their entitlement, the fault will lie with the employer, as the worker will be regarded as the weaker party in the employment relationship.

Implications

UK employers need to be aware that the ‘use it or lose it’ provision of WTR (not being able to carry forward holidays) may conflict with the WTD when employers do not communicate sufficient information to their workers and enable them to exercise their right to paid leave.

Minden U.K. Limited use Aspire Business Partnership LLP. This firm provide Minden U.K. Ltd with practical and commercially sound advice in relation to all aspects of compliance, business strategy and conflict resolution. Original article can be found on Aspire’s website:

https://www.aspirepartnership.co.uk/News/3222/working-time-regulations-communicate-or-remunerate