Holiday Entitlement – exploring recent developments

There have been recent and noteworthy case law developments regarding holiday entitlement. The specific cases in question concern sick workers, oil-rig workers and airline pilots. However the decisions have implications for other industries.  

Such as in the case of Russell v Transocean International Resources (2011) where the Supreme Court confirmed that offshore oil-rig workers are not entitled to annual leave in addition to their onshore breaks. The position of the European Court of Justice (ECJ) is that the purpose of annual leave entitlement is to allow workers to rest and enjoy periods of relaxation and leisure. The Supreme Court held that ‘rest period’ means any period in which the worker is not working, therefore employers may insist that paid leave be taken during this time – good news for those operating in sectors such as education and tourism, where workers can be asked to take their annual leave during periods such as non-term time and off-season.

Should holiday entitlement for airline pilots include allowances on top of their basic salary? In the case of Williams and others v British Airways (Case C-155/10) the Supreme Court made a reference to the ECJ to consider this question, and the meaning of ‘paid annual leave’. The pilots, who had not been receiving additional flying supplements during holiday periods, claimed that BA were in breach of Reg 4 of the Civil Aviation (Working Time) Regulations 2004, which provides the right to paid annual leave, but does not specify how the amount is to be calculated.

The ECJ held that during annual leave pilots should receive their ‘normal remuneration’, not just their basic salary, pointing out that where pay is made up of several components, employers should examine each one to determine whether it constitutes ‘normal remuneration’. Where remuneration is linked intrinsically to performance this must be taken into account, however the occasional or ancillary costs such as those connected with the time the pilots spend away from base need not have any bearing on payment. The ECJ’s reasoning is that pilots have the right to enjoy economic conditions which are comparable to periods of employment, during their holiday.

To see the impact of this judgement on domestic legislation, we await the final decision of the Supreme Court.

Lastly, a recent ruling of the Employment Appeal Tribunal (EAT) suggests helpful development (as far as employers and agencies are concerned) in terms of the holiday entitlement of workers on long-term sick leave. In the case Fraser v St George’s Mental Health Trust (2011) Mrs Fraser was absent from work from November 2005 up until her subsequent dismissal in October 2008. Upon dismissal she was paid the untaken holiday entitlement accrued during the 2008/2009 leave year, but not her statutory four weeks’ holiday for 2006 and 2007. The EAT ruled that workers on sick leave are required, under Reg 15 of the Working Time Regulations 1998, to give notice of their intention to take paid annual leave. Mrs Fraser had not given notice during 2006 or 2007. She received no award.

However, this outcome conflicts with an earlier EAT decision in NHS Leeds v Larner (2011), where Mrs Larner was found to be entitled to her accrued leave, despite failing to submit a request for annual leave before the end of that year. Mrs Larner has been given leave to appeal. Until the conflict is resolved by the Court of Appeal, employers should be cautious of looking to Fraser to decide how to handle requests for untaken holiday pay, as it is not clear which of Fraser or Larner precedents the Court will say is correct.

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