IMG_7742Kathleen Greenfield v The Care Bureau Limited is a decision of the European Court of Justice which provides very welcome practical and common sense advice for those tasked with calculating holiday entitlement when an employee’s working pattern changes.

The case was referred to the ECJ by the Birmingham Employment Tribunal in April 2014. Ms Greenfield had worked for The Care Bureau since June 2009. Her working days and hours could vary from week to week. She was entitled to 5.6 weeks’ holiday per year and the holiday year ran from 15 June. She left the employer on 28 May 2013, having taken seven days’ paid leave during her final leave year (in July 2012). In the twelve weeks prior to taking her leave her pattern of work was one day per week.

However, from August 2012 she worked twelve days on and two days off (taken as alternate weekends). This equated to 41.4 hours per week. In November she asked for a week’s paid leave but was told that as a result of the holiday taken in June and July she had exhausted her entitlement to paid annual leave. This was because the entitlement to paid leave was calculated at the date on which the leave was taken, based on the working pattern for the prior 12 weeks. Since that pattern was one day per week she had taken the equivalent of seven weeks’ paid leave, thereby exhausting (and exceeding) the annual entitlement.

Ms Greenfield took her case to the Birmingham Employment Tribunal and won. The Care Bureau Limited requested written reasons and the Tribunal proposed to reconsider its decision on the basis that the law was unclear, thereby justifying a reference to the European Court. However, after considering written representations the tribunal decided that a reference was unnecessary and confirmed its decision to find in favour of Ms Greenfield. The Care Bureau Limited appealed to the Employment Appeal Tribunal.

It also applied to the Birmingham Employment Tribunal to reconsider its judgment. It did so and revoked its judgment, partly on account of a mathematical error and also to enable the reference to the ECJ.

Ms Greenfield contended that leave already accrued and taken should be retroactively recalculated and adjusted following an increase in working hours in order to be proportional to the new number of working hours rather than the hours worked at the time that the leave was taken.

The Care Bureau Ltd maintained that EU law did not provide for a new calculation and there is therefore no need to make such an adjustment under national law.

The ECJ began by emphasising the importance of the right to paid annual leave and that the entitlement should not be interpreted restrictively. Since the entitlement to paid annual leave is to enable the worker to rest from carrying out the work required to be carried out under the contract, the entitlement to paid annual leave must be calculated with regard to the work pattern specified in the contract.

Under EU law the relevant unit of calculation is the hour and holiday entitlement must be expressed in days, hours and/or fractions of days/hours. Accordingly the entitlement to minimum paid leave was to be calculated with reference to the days, hours and/or fractions thereof referred to in the contract of employment. It therefore concluded as follows:

In a situation such as that at issue in the main proceedings, EU law therefore requires a new calculation of rights to paid annual leave to be performed only for the period of work during which the worker increased the number of hours worked. The units of paid annual leave already taken during the period of part-time work which exceeded the right to paid annual leave accumulated during that period must be deducted from the rights newly accumulated during the period of work in which the worker increased the number of hours worked.

Having regard to all the above considerations…clause 4.2 of the Framework Agreement on part-time work and Article 7 of Directive 2003/88 must be interpreted as meaning that, in the event of an increase in the number of hours of work performed by a worker, the Member States are not obliged to provide that the entitlement to paid annual leave already accrued, and possibly taken, must be recalculated retroactively according to that worker’s new work pattern. A new calculation must, however, be performed for the period during which working time increased.

In like manner, when calculating payment of accrued holiday entitlement on termination of employment, if there has been a change in working pattern which increases the hours worked there should be “before and after” calculations in order to arrive at the correct overall entitlement.

As an aside and as a general observation it is worth noting that weeks should be avoided as the basis of any holiday or similar contractual calculations in order to avoid unwanted anomalies such as in this case. This is particularly applicable to calculations in respect of part time workers.