Would reforming the Working Time regulations be a good idea?

Brexit. Brexit. Brexit. Whilst Christmas and New Year provided a welcome rest from Brexit-dominated headlines, there is no doubt that the media train will start in earnest sooner rather than later.

Just before Christmas, various newspapers reported that the Working Time Regulations could be a target for the Government following the UK’s departure from the EU. Certain newspapers went further and stated that repealing or substantially amending the Working Time Regulations would be a positive example of removing so-called ‘red tape’ and freeing businesses from the burden of overbearing regulations; some newspapers even trotted out the over-used line of ‘taking back control’.

So, to use that awful phrase, should the UK ‘take back control’ and amend the Working Time Regulations?

Important ECJ decision opens up the possibility of valuable retrospective holiday claims

I have written in this blog on many occasions about the importance of getting it right if you are going to treat all or part of your workforce as self-employed, rather than as fully fledged workers or employees. As you may recall, the Pimlico Plumbers case earlier this year ruled in favour of the claimants, finding that they were workers rather than being “fully” self-employed and therefore entitled to holiday pay and other benefits. The issue has been a hot topic throughout 2017 with the Uber and Addison Lee cases for example showing a willingness on the part of the courts to find that there was an employment relationship where, previously, there was assumed not to be.

But what basis should be applied for calculating losses if an entitlement to retrospective holiday pay or other benefits is established. The normal cut off point for calculations is six years, since this is the time limit for claims based on breach of contract. However, the entitlement to paid holidays arises under the EU Working Time Directive and this has a statutory footing.

This issue was recently considered by the Court of Justice of the European Union (CJEU/ECJ) and judgment was delivered in the case of King v The Sash Window Workshop Limited and Dollar on 29 November. Mr King had started working for Sash Window Workshop (“the Company”) in June 1999 on a “self-employed commission only contract”. He continued to work for the Company until his retirement in 2012. He took numerous holidays during the 13 years that he worked for the Company, but was not paid for them. Following his retirement he asked to be paid all his holiday pay for the entire period of his engagement. Unsurprisingly, the Company refused.

Mr King took his claim to an employment tribunal which held that there were in effect three types of holiday claims: (i) holiday pay for 2012-13 accrued but untaken when he left, (ii) holiday pay for leave actually taken but in respect of which no payment was made and (iii) pay in lieu covering accrued but untaken leave (amounting to a further 24.15 weeks). The tribunal found that Mr King was a worker (within the meaning of the statutory definition – see the Pimlico case) and therefore ruled in his favour in respect of all three.

The Company appealed to the Employment Appeal Tribunal.

Handling Honeymoons

Moose sign Full disclaimer: I’m off on honeymoon soon. I plan to spend 3 weeks driving around Canada and, in my head at least, spotting many moose and bears and eating my body weight in maple syrup and pancakes! But, fear not Canter Levin & Berg, this article isn’t published as a hint to you but, rather, because I get a lot of questions from employees and employers alike about ‘honeymoon etiquette’!

Now, honeymoons are a curious beast. Firstly, because it tends to be one of the few occasions where an employee is allowed more than two consecutive weeks of annual leave and, secondly, because it remains a symbolic event in which a newly married couple are seen to go away and focus on each other which, naturally, doesn’t really interlink with the concept of working.

123 days to go: Is it time to start thinking about Christmas?

I love Christmas! Absolutely, utterly love it. As my friends and family will tell you, I’m the guy with the Christmas countdown app on my iPhone, the colleague who hangs obscene amounts of tinsel and Christmas paraphernalia around my desk and, every year in September, start googling Christmas Market trips in Europe (last year was Brussels, which is highly recommended!)

Surprisingly, however, it isn’t the quirky number of 123 days to go which has prompted this blog. Rather, it was a recent news article on the BBC News website entitled “Forget summer, it’s time to preare for Christmas” – a link can be found here. The article is mostly about employers preparing their product range for Christmas but, from an employment law perspective, it made me think about the ways in which businesses also need to manage personnel and policies to ensure an effective, stress-free Christmas period.

I’d be missing a clear open goal if I didn’t use Santa as my example employer here. So, here we go, let’s get some pre-planning in place to get Santa ready for Christmas!

Voluntary overtime included within holiday pay: freely given time isn’t free!

The Employment Appeal Tribunal (EAT), the Tribunal which hears appeals from the regular Employment Tribunal, has recently confirmed that regular payments for overtime incurred voluntarily by employees should be taken into account when calculating an employee’s allowance of 20 days of holiday pay (this is the statutory minimum amount of holiday leave outside of the 8 days usually allowed for bank holidays). This was in a case called Dudley Metropolitan Borough Council v Willetts.

 

This follows the well-publicised case of Bear Scotland v Fulton in 2014 which stated that overtime should be factored into holiday pay calculations (mainly by averaging payments over a defined period of time  and ‘bumping up’ employee’s holiday pay accordingly).

 

However, there have been arguments that there should be a distinction between mandatory overtime and voluntary overtime. Just for clarity, when I say ‘voluntary’ overtime, I mean overtime that an employee isn’t contractually obliged to perform (i.e. I don’t mean unpaid overtime).  You can see both sides on this one – from one point of view, employees have no choice but to accept mandatory overtime and therefore only that should increase holiday pay amounts, whereas on the other hand, employees will still be working overtime whether voluntary or mandatory and shouldn’t they therefore be rewarded for their voluntary act?

 

On this occasion, the EAT has come down on the side of employees and concluded that, as long as the voluntary overtime is ‘regular’ enough, it should be used within holiday pay calculations.  This is because ‘regular’ payments will constitute ‘normal pay’ for the purposes of holiday pay calculations.  Naturally, the phrases in quotation marks are still prone to argument and a lot depends on the individual facts.

 

So, what does this mean going forward for employees?  Well, it suggests that employees on a voluntary rota (or similar) who are called to work voluntary overtime are entitled to an increase in their holiday pay in respect of that voluntary overtime.

 

Let’s take the case of six employees: Monica, Rachel, Phoebe, Joey, Ross and Chandler (yes, as you probably suspected, this is the cast of FRIENDS).

European Court of Justice gives OPINION on unpaid and untaken holidays

Does a worker’s holiday entitlement continue to accrue into successive years if they do not take their annual leave because their employer will not pay them for these holidays?

The Advocate General at the European Court of Justice (ECJ) has answered ‘yes’ to this question, in a non-binding opinion.

In the case of King v The Sash Window Workshop Ltd, the Claimant, Mr King (who was a self-employed salesperson), brought an Employment Tribunal (ET) claim against the Respondent, The Sash Window Workshop, on the basis that he felt he was owed monies for annual leave that he had accrued, but not taken.  In addition, the Claimant sought compensation for annual leave that he had taken, but not been paid for during the 13 years he had been working for the Respondent – his claim for holiday pay therefore amounted to over £27,000.00.  It is of note that the contract under which Mr King was employed, provided no right to paid annual leave and that this contract was terminated in 2012, on his 65th birthday.  The Claimant also submitted a claim for age discrimination.

The claim was initially heard by the ET in August 2013.  It was ruled at first instance that Mr King was to be deemed a worker for the purposes of the Working Time Regulations 1998, and also that his discrimination claim was well founded.

The Respondent subsequently appealed against the decision of the ET in respect of the holiday pay aspect of the claim, the Employment Appeal Tribunal (EAT) allowing the appeal and remitting the holiday claim back to the ET.  Mr King then submitted an appeal to the Court of Appeal who referred the case to the European Court of Justice (ECJ).

ECJ Advocate General Evgeni Tanchev, stated that employers had to provide “adequate facilities to workers” to enable them to take their paid annual leave.  Tanchev further stated:

“A worker, like Mr King, may rely on [EU law] to secure payment in lieu of untaken leave, when no facility has been made available by the employer, for exercise of the right to paid annual leave … Upon termination of the employment relationship a worker is entitled to an allowance in lieu of paid annual leave that has not been taken up.

“I appreciate that the answers to the questions referred I am here proposing would require employers rather than workers to take all the necessary steps to ascertain whether they are bound to create an adequate facility for the exercise of the right to paid annual leave, whether those steps be the taking of legal advice, consultation with relevant unions or seeking counsel from Member State bodies that are responsible for the enforcement of labour law.

“If an employer does not take such action, it will risk having to make a payment in lieu of unpaid leave on termination of the employment relationship. However, this would be in keeping with guaranteeing the effet utile of the right to paid annual leave, a fundamental right of substantive normative weight in Member State law, EU law, and international law, and would also be consistent with the practical reality, recognised in the Court’s case-law, of the worker’s position as the weaker party in the relationship.”

Is requesting a holiday from July to September manifestation of a religious belief that is capable of protection?

Where do you draw the line with protection of workers on the grounds of religious or philosophical belief? It is a question that I have been addressing in this blog ever since protection from discrimination on these grounds was first introduced. It is logical that there is a limit. For example, if a person’s belief is used as justification for discriminating against others, there can be no case for allowing the alleged victim of discrimination him or herself to engage in discriminatory acts. Another question is whether and if so at what point the manifestation of a religious belief tips over the edge between a “reasonable” accommodation and one which, perhaps for a number of reasons, “just goes too far”. That leads us to the remarkable case of Mr Gareddu, a practising Roman Catholic of Sardinian origin.

Gareddu v London Underground Limited concerned Mr Gareddu’s requests for summer holidays running from 27 July to 2 September (five consecutive weeks). He joined London Underground in 1990 and was entitled to 38 days’ holiday per year (including Bank Holidays). From 2009 to 2013 he took five weeks’ consecutive summer holiday to travel to Sardinia with his two brothers to visit his mother and attend a number of religious festivals, up to 17 per visit. He said that he would attend the festivals for those saints with whom he felt a particular affinity.

In March 2013 a new line manager, Mr Cross, took over. He refused the request for five weeks’ holiday and said that, in future, he would be unlikely to be granted more than 15 continuous days during the summer holiday period. As it happened the 2014 trip was pre-booked and allowed but a holiday request from 27 July to 2 September 2015 was refused. Mr Gareddu contended that this amounted to indirect religious discrimination, contrary to section 19 of the Equality Act 2010.

At a tribunal in December 2015 Mr Gareddu’s claim failed on the basis that the “asserted religious belief requiring attendance at a series of religious festivals during the period 27 July to 2 September” was not made in good faith. While attending religious festivals was a manifestation of religious belief, being required to do so within a specific five-week period was not in itself a specific manifestation capable of protection under the Act.

Mr Gareddu appealed to the Employment Appeal Tribunal on four grounds:

The tribunal took the wrong approach by failing to make findings as to the provision, criterion or practice (PCP) in issue, whether the employer applied that PCP to people with whom Mr Gareddu did not share the characteristic of being a Sardinian Catholic, whether participating at numerous religious festivals was a typical manifestation of the religious beliefs of Sardinian Catholics, whether Mr Gareddu was put at a disadvantage as a result of the PCP and, if so, whether the disadvantage was justified as a proportionate means of achieving a legitimate aim.
The tribunal imposed an unwarranted additional requirement that religion should be the sole or primary motivation for the manifestation in order to benefit from protection under section 19.
It considered an irrelevant factor – the desire to worship collectively with his family – when considering whether he had acted in good faith.
It adopted a perverse construction of Mr Gareddu’s evidence by finding that he had claimed to attend the same 17 events annually and, flowing from this, that he had changed his evidence in the course of the hearing.

What are the likely implications of Brexit on UK Employment Law/HR practices?

Employers may not be aware that much of the current legislation in place to protect employee rights actually derives from the European Union – for example, working time regulations, rights of the employees on a business transfer (TUPE) and family leave rights to name but a few. Indeed some Politicians for the ‘Leave Campaign’ will no doubt have argued that such laws were inhibitive to British businesses and produced too many rules and regulations having a negative effect on both time and profits.

What is likely to happen?

In reality it is doubtful that the UK Government would look to repeal any employment law which implements minimum EU requirements, the reason being that many of these laws simply complement existing UK law (equal pay rights for example). In addition, much of our existing employment law simply reflects good/acceptable practice in business (or indeed life generally!) such as the right not to be discriminated against on the grounds of sex, age, disability etc. Furthermore some UK Laws actually go above and beyond the minimum requirements of EU legislation – in respect of holidays for example, the EU Working Time Directive 2003/88/EC only requires EU Member States to provide for a minimum of 20 days’ annual leave for employees, whilst the UK statutory minimum leave entitlement is actually 28 days inclusive of normal bank and public holidays.

As a final point it is worth noting that despite a (potential) Brexit, the UK will still need to maintain strong trading relations with Europe. If the UK is a member of the EEA (European Economic Area) it would be required to remain subject to many aspects of EU employment law.

In light of the above, whilst in my view the majority of employment law legislation will not be repealed or significantly changed, the UK Government may look to alter some employment law that UK businesses have struggled with. The following are areas that may be most susceptible to change:

Carrying over holiday pay when sick

Extended absence from work on sick leave can create odd situations, such as the accumulation of holiday entitlement. Most employers know that employees on maternity leave continue to accrue holiday entitlement and this is often added at the end of the maternity leave period.

In this month’s Employment Appeal Tribunal decision in the case of Plumb v Duncan Print Group the question was whether Mr Plumb, who had been off work for nearly four years, could claim all his accumulated holiday entitlement.

Mr Plumb was employed as a printer. He had an accident on 26 April 2010. He remained on sick leave until his employment was terminated on 10 February 2014. According to the terms of his employment his leave years ran from 1 February to 31 January. He was refused a request for holiday leave from 5 August 2013. When his employment was terminated he claimed holiday pay for 2010, 2011 and 2012. His request was refused in the basis that he could not demonstrate that he was unable, by reason of his medical condition, to take annual leave within the leave years.

Regular readers are aware that European law has dictated that holiday pay can accrue during sickness absence but there should be a cut off point. I wrote about this in the blog in 2011.

The employment tribunal took the view that Mr Plumb could not demonstrate that he was unable, by reason of his medical condition, to take annual leave while he was on sick leave and therefore dismissed his claim. That was not the basis on which the European decisions had excluded claims because they were based on the need for a cut off point.

The tribunal’s approach was wrong:

Holiday pay doesn’t include voluntary overtime, does it?

I rarely report decisions of the Northern Ireland courts because they are not binding in England and Wales. However, this is the second consecutive month in which a Northern Irish decision is worthy of comment, this time from the Court of Appeal in Patterson v Castlereagh Borough Council.

Mr Patterson, a lead claimant for the purposes of a multiple claim, alleged that there was an unlawful deduction from his wages because he was no longer paid holiday pay relating to casual work as a recreation assistant in addition to his post as an assistant plant engineer. His claim was amended to allege that his holiday pay did not take into account the voluntary overtime he worked in his full time post.

His claim relating to his casual work was successful and this was not challenged. Consequently his appeal was limited to the voluntary overtime aspect. In this case Mr Patterson was asked to work overtime by his employer and could choose whether or not to do so because it was not a contractual obligation. Hence its classification as voluntary. There was a technical point concerning whether Mr Patterson had established the earnings he received pursuant to the voluntary overtime but both parties agreed that the point of principle should be determined.

Assuming that the earnings were established evidence submitted for the appeal suggested that they would have amounted an average additional pay of £60 per week. Having considered the relevant sections of the Working Time Directive the Court went on to consider the relevant case law. In British Airways plc v Williams (2012) the Supreme Court considered whether, for the purposes of calculating holiday pay, a pilot’s remuneration should be treated as basic pay or whether it should be based on “normal remuneration”, i.e. including payments “intrinsically linked” to the performance of the employee’s duties. Having referred the question to the European Court of Justice the answer was that it should be based on normal remuneration.

In Lock v British Gas (2014) that principle was extended to include commission payments and in Bear Scotland Limited and Others (2015) employees were successful in having included in the holiday calculation overtime which they were required to work, but which the employer was not obliged to offer.