Calculation of holiday entitlement who increase their hours

In the case of Greenfield v The Care Bureau Ltd, the European Court of Justice (“ECJ”) considered how to approach the calculation of a worker’s holiday following an increase in working hours.

Background

The calculation of paid holidays for workers and employees who have varying working hours and patterns can be difficult.  Workers are entitled to a minimum of 5.6 weeks paid holiday per year and so employers must ensure that part-time workers receive an appropriate pro-rated amount of holiday.  One particular area of difficulty arises where a worker moves from part time work to full time work part way through the year.  In a previous case, involving an Austrian employer and employee (Zentralbetriebsrat der Landeskrankenhauser Tirols), the ECJ  had  held that full time workers accrued an entitlement to holiday pay on the basis of the hours (or days) worked while they were working full time up to the date they moved to part time work.  That was beneficial to the employees who could then take all their accrued holiday from their later part time working hours (or days).  The Greenfield case addresses the opposite problem – where a part time worker moves to full time work.  The issue in this case was whether the same principle applied as in the Austrian case, which would mean the workers were limited to taking holiday after they started working full time on the basis of the time they had accrued while working part time.

Facts

In Greenfield v The Care Bureau Ltd, the Claimant was a care worker employed by the Respondent and her working hours and days varied from week to week.  She was entitled to 5.6 weeks of leave per holiday year which ran from 15 June each year.  Her holiday entitlement was calculated by taking her average hours worked in the 12-week period preceding the holiday.

In July 2012, the Claimant asked for, and was allowed to take, “7 days’ of paid holiday”.  In the 12 weeks’ preceding the holiday, she had only been working 1 day per week.  This meant that taking 7 days of holiday equated to 7 weeks’ leave because she only needed to take one day off work each week during that period to have a whole week off. As such, she had exceeded her annual entitlement of 5.6 weeks’ leave. 

In August 2012, the Claimant increased her hours to 12 days per fortnight.  She made a further holiday request for a week’s leave in November 2012 but the Respondent refused the request on the basis that she had exhausted her annual entitlement in July of that year.

When the Claimant left employment in May 2013, she brought a claim to the Employment Tribunal (the “Tribunal”) for pay in lieu of accrued, untaken leave, arguing that the Respondent should have retrospectively recalculated and increased her leave entitlement based on her increased hours.  The Tribunal made a referral to the ECJ.

Decision

The ECJ confirmed that if a part-time worker increases their hours, the employer does not have to recalculate their entitlement to holiday retrospectively for the whole holiday year.  

However, it held that an employer should not treat the worker as having exhausted their entitlement to accrued holiday calculated by reference only to their part-time working hours, if they then changed to full-time hours or otherwise increase their hours.  Instead, employers should look at each period of work separately and calculate the holiday entitlement for each period based on the working pattern during that period. A new calculation of right to paid holiday should therefore be performed, but only for the period of work during which the worker had increased their hours. 

The ECJ also confirmed that the paid 7 days’ holiday already taken (in July) which exceeded the right to paid holiday accumulated during that period should be deducted from the paid holiday later accumulated during the period of work in which the worker increased the number of hours worked (in this case, from August onwards).

Comment

While this decision is consistent with the earlier Austrian decision and, at one level, seems a sensible approach in principle, it does mean that employers will need to perform complicated calculations of entitlement to paid holiday pay when a worker changes their hours part way through a year. 

One of the difficulties in this sort of case arises because the employer in the Austrian case had provided for the calculation of holiday entitlement by hours and weeks.  Even though the European Working Time Directive, in one place, requires an employer to allow for paid holiday in terms of weeks, the ECJ held in that case that the calculation had to be made on the basis of hours and days and not weeks.  The UK Working Time Regulations similarly provide for the entitlement to holiday in terms of weeks (rather than days or hours), although the employer, the worker and the court all dealt with the case on the basis of the days worked and days holiday taken.

It is invariably the case that complicated calculation of holiday pay relating to part time workers are easier if the calculation is done by reference to weeks and not days or hours.  In this sort of case, though – where there is change from part time to full time working or vice versa – the effect of the cases seems to be that the complicated calculation will need to be done by reference to hours and days, rather than weeks. 

It is also important to check the terms of the employee or worker’s contract when calculating holiday entitlement, as their contract may provide for a more favourable approach to the calculation of holiday.

Employers should note that this decision applies equally to holiday being calculated at the end of employment with a view to paying in lieu of untaken holiday on termination. 

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