Holiday: Complexity, Clarity and Consultation

Bexley Beaumont Senior Associate Alice Kinder writes that even though a Government consultation on an important Supreme Court decision regarding holiday pay may ultimately provide employers with greater clarity, companies can’t afford to wait for the outcome if they are to avoid potentially costly employment law claims.

We all tend to think of holidays as an opportunity to relax and unwind away from the pressures of work.

However, the administration of vacations is rather more complicated, particularly since a landmark ruling by the Supreme Court.

Some readers might have missed it or at least not paid full attention to its significance as it was - without any sense of irony - handed down last July, when a sizeable proportion of the UK's working population was itself on holiday.

Nevertheless, it represented something of a milestone and is a decision which the Government has seen fit to respond rapidly to.

The case involved a woman called Lesley Brazel, who started teaching music to pupils at Bedford Girls School in 2002.

It hinged on the interpretation of a piece of EU legislation called the Working Time Directive (or WTR, for short), which has since become part of UK law as the Working Time Regulations 1998

The directive covers a number of employee entitlements relating to the length of the working day and the working week. It also entitles workers to 5.6 weeks of paid holidays each year.

The Supreme Court was told that during the school terms, Mrs Brazel working hours differed depending on how many pupils needed lessons. In general, she taught between 10 and 15 hours a week, encouraging beginners on the saxophone and clarinet as well as helping more advanced students prepare for examinations and concerts.

The Harpur Trust, which runs the school, maintained that the holiday entitlement of part-year staff like Mrs Brazel should be pro-rated to take account of the weeks which they didn't work.

Mrs Brazel, however, argued that under the terms of the European Union's Working Time Directive, the Trust's calculation was unfair.

Hers was a position with which the Supreme Court agreed, concluding that "no distinction is drawn between full-time, part-time and part-year employees" under the Directive

Even if, the judgement continued, the outcome resulted in Mrs Brazel being entitled to a "proportionately greater leave requirement than full-time workers, such a construction is compliant with the WTD".

The ruling is massively important because it impacts permanent, part-year and seasonal staff working across all sectors.

An idea as to the number of individuals who might be affected was provided by ministers, who were quick to realise the implications.

In January, the Government launched a consultation in an attempt to determine how best to deal with a holiday entitlement situation which had become "complex" over recent years.

It estimated that as many as 500,000 permanent term-time and zero-hours contract workers and up to 200,000 agency workers would be able to receive and be paid for more holiday entitlement as a result of the Supreme Court judgement.

The consultation document

notes that the Working Time Regulations do not expressly set out how to calculate holiday entitlement for part-year workers on permanent contracts - those in a similar position to Mrs Brazel.

Furthermore, whilst the WTR established an overall entitlement, they "do not set out how to convert this into entitlement in days or hours for workers with irregular hours".

Government hopes that the consultation - which closes this week - will produce a solution which addresses that conundrum without having "any adverse impacts on other parts of the legislation".

The groups whose views are being canvassed ("employers, workers, business representative groups, unions and those representing the interests of groups in the labour market") underlines how critical the issue is.

Speed is very much of the essence, especially if recent research is anything to go by.

Even though some businesses who took part in one study reckoned that the Supreme Court's ruling would affect up to half of their staff, only 11 per cent had updated their proceedings since it was delivered last summer

Failing to do so, of course, presents the potential for being challenged in an employment tribunal, with all the cost and damage to workplace relations which that might bring.

For all employers, regardless of size, clarity is key. When it comes to holidays - a fundamental part of the contractual relationship with their employees - the Government's swift intervention after the Supreme Court decision may, therefore, be a source of comfort.

Until we know the precise nature of how ministers plan to tackle the issue, it is arguably even more vital than usual for bosses to seek expert guidance to avoid any difficulties.

To discuss any of the above further, please feel free to contact Alice Kinder:  |  07526 372580