Changes to Employee Holiday Rights

12-Dec-2011

Employment law in relation to statutory holidays is constantly changing. The position changes case by case and the Government is also proposing further changes. To help you through this minefield, we have set out below some of the key issues.

 

Basic entitlement

Every employee is entitled to 5.6 weeks holiday. To calculate an employee’s entitlement, simply multiply 5.6 by the number of days they work, subject to a maximum of 5 days. For example:

 

A works Monday to Friday and is therefore entitled to 28 days holiday (5.6 weeks x 5 days = 28 days).

 

B works Monday, Wednesday, Friday and remains entitled to 5.6 weeks holiday but only to 16.8 days (5.6 weeks x 3 days = 16.8 days).

 

Taking annual leave

In the absence of alternative provisions, an employee’s holiday year will commence on their first day of employment and renew on the anniversary of their start date.

 

Before taking holiday, an employee must serve notice on the employer. If the timing of the requested holiday is inconvenient, the employer can serve a counter notice refusing the request. An employer can also require their employees to take holiday at a particular time, again by serving notice.

 

Employers can set their own notice requirements, or alternatively the Working Time Regulations (WTR) set out the various periods required.

 

Failure to use full statutory entitlement

What happens if, by the end of the leave year, an employee has not used their full entitlement? What are the options open in respect of preserving that unused holiday entitlement?

 

The answer will depend on why the employee has not used their entitlement but the legislative position is:

• 4 weeks holiday must be taken in the leave year it was accrued or else forfeited;
• 1.6 weeks can be carried over provided there is a relevant agreement between employer and employee to do so (NB. the employer cannot insist that the employee carries over this entitlement, the request must come from the employee); and
• No part of the 5.6 weeks entitlement can be paid in lieu during employment.

 

There are 3 typical scenarios in which an employee may not have used their full holiday entitlement:
1. The employee simply has not requested it all;
2. The employee has been prevented from using it by reason of their absence on sick leave;

3. The employee has been prevented from using it by reason of their absence on family related leave.

 

1. Failure to request:

The employer can agree to a request to carry forward up to 1.6 weeks entitlement. Any untaken holiday over 1.6 weeks will be forfeited. The employee does not have the right to be paid in lieu of their statutory holiday whilst they remain employed.

 

2. Absence on sick leave:

The employee’s entitlement to statutory holiday will continue to accrue in their absence and they then have a choice as to what they do with that holiday.

 

In Pereda v Madrid Movillad SA the ECJ identified two options: either the employee designates a period of their sick leave as holiday, thereby taking their entitlement to holiday and being paid for it or, the employee carries over their entitlement, plus the corresponding entitlement to payment, into the next leave year. Given the ‘use it or lose’ it policy in the WTR in relation to the basic 4 week holiday entitlement, Employment Tribunals have had to permit an exception for when holiday entitlement has not been taken due to sickness absence.

 

However, if the employee fails to inform the employer which option they are pursuing the ECJ did not spell out what will happen. Does the employee’s entitlement to holiday and to pay automatically carry over? The Employment Appeal Tribunal (EAT) has addressed this point in the recently published Fraser v South West London St George’s Mental Health Trust judgement, which held that the employee must actively advise the employer that they want to carry their holiday over. If the employee does not, their entitlement will be forfeited along with their right to payment for that holiday.

 

Unfortunately this is not necessarily the end of the issue. The Court of Appeal will be looking at the same points in a case due to be heard later this year/early next year.

 

3. Absence on family related leave:

An employee absent on maternity, paternity or adoption leave continues to accrue their entitlement to statutory and contractual holidays. An employee taking a period of unpaid parental leave only accrues the right to statutory holiday.

 

Unlike employees on sick leave, an employee on family related leave cannot use their holiday entitlement whilst they are on leave. They must choose either to be on family related leave or annual leave. Under the provisions of the WTR, if their absence spans two holiday years, the employee would forfeit their unused entitlement to holiday.

 

However the WTR are out of step with European case law. The ECJ has indicated that if women were to forfeit their entitlement to holiday because of their absence on maternity leave, this would constitute sex discrimination. Therefore, employers have a duty to ensure that the right to take holiday is preserved either by encouraging the employee to take their unused entitlement before they start their family related leave or by allowing the employee to carry over their entitlement.

 

Employers should note that the usual rules prohibiting payment in lieu of holiday will still apply to employees absent on family related leave.

 

For more information about changes to employment law contact our employment solicitors

---