BECTU's response to Working Time Regulation proposed amendments July 2001

13 July 2001

BECTU's concerns regarding the UK Government's proposals for amending the Working Time Regulations (WTR) to reflect the European Court of Justice (ECJ) ruling of 26 June 2001.

Removing the qualifying period
1. As the Government states in the Consultation Document, "the qualifying period must be removed to bring domestic law into conformity with the Court's interpretation of the Directive". The only amendment necessitated by the ECJ judgement is the deletion of Regulation 13 (7) of WTR. This is the remedy sought by BECTU and the relief which will be granted when the matter returns to the UK court. When this provision is deleted, it will mean that the right to paid annual leave arises from day one of "employment" (we use this term here to refer both to "employees" and to "workers") but a worker will not be able to insist on taking leave at the very beginning of employment because an employer can serve a notice under Regulation 15(2).

2. The proposed accrual system is unnecessary. It is an added complication for employers and workers and it diminishes the rights of workers under WTR.

3. Our concerns cover two areas: the taking of leave and payment in lieu of leave accrued but not taken on termination of employment.

   Requests to take leave

4. New Regulation 15(3)(a) states that, in the first year of employment, a worker may only request leave up to the amount which she or he has accrued at the date the notice is given. This is unfair and unnecessary. A worker should be able to give notice requesting any amount up to her/his full leave entitlement. The employer can serve notice under Regulation 15(2) refusing all or some of that leave if the employer does not wish leave to be taken before it has accrued.

5. If, notwithstanding this, the Government considers that some restriction is necessary, the limit should be the amount of leave which the worker has accrued at the date of the proposed leave, not the date of the request. It is quite possible that a worker taking up a new job in, say, March will already have booked holiday in August and would wish to give notice to her new employer based upon the leave entitlement as at August.

   The first period of employment

6. Our major concern is that the amended Regulations would have the effect of denying a right to paid annual leave to all workers in the first 10 days of employment and all those employed on contracts for 10 days or less. It is possible that they would have the effect of denying the right to all workers in the first month of employment or on contracts of one month or less.

7. This arises because of the combined effect of new Regulations 13(2), 15(1A) and 15(3)(a). It is stated that leave accrues at the rate of one-twelfth for each month of employment. It is possible that this would be interpreted as meaning that no right has accrued until the first month has elapsed. We return to this point below.

8. Even if Regulation 13(2) is interpreted as meaning that leave accrues on a daily basis at the rate of one-twelfth of annual entitlement per month, this still creates problems in the first days of employment and on short term engagements. The annual entitlement is 4 weeks. Assuming a five day week, this is an entitlement of 20 days, which is equivalent to an accrual of 0.05 day's holiday per day. By virtue of Regulation 15(1A), all fractions of days below one-half are to be disregarded. This means for the first nine days of the engagement (whether worked or not) the worker would have an entitlement to take less than one day's leave and therefore would have no entitlement to take leave. This contrasts with Regulation 13(6) which provides that for certain purposes any fraction of a day is rounded up to a whole day.

9. Taken together with Regulation 15(3)(a) referred to above, this means that a worker in those first nine days (or a worker on a contract spanning nine days or less) cannot request or take leave. This is contrary to the judgement of the ECJ. The right to paid annual leave is a "social right directly conferred by [the] Directive on every worker as the minimum requirement necessary to ensure protection of his health and safety" (paragraph 47) and the ECJ emphasised that workers on a succession of short-term contracts "often find themselves in a more precarious situation than those employed under longer-term contracts, so that it is all the more important to ensure that their health and safety are protected" (paragraph 63).

10. The contravention is even more serious of no right to leave accrues until the end of the first month of employment.

    Accrual of entitlement and payments on termination

11. The proposed amended Regulations do not give clarity as to the accrual of leave entitlement, particularly in the first month of employment, and the impact on the payments due to workers on termination of employment under Regulation 14.

12. Regulation 13(2) states that the entitlement "shall accrue over the course of that year at the rate of one-twelfth for each month of employment". As stated above, this is ambiguous as to the position in the first month. Employers may seek to interpret the provision as meaning that no leave entitlement accrues until the end of the first month of the engagement. This surely cannot be the Government's intention as it would be a clear breach of the Directive as interpreted by the ECJ. The points made above would then apply with even greater force.

13. The amended Regulations should make clear that leave entitlement accrues on a daily basis at a rate equivalent to one-twelfth of the annual entitlement each month. This means that every worker would have an entitlement from day one. The employer could of course decline to grant a request for leave in the early days of the engagement or on a short engagement, but the worker would have acquired an entitlement to leave and, consequently, an entitlement to a payment on termination for leave accrued but not taken.

14. This may be the Government's intention, but the Regulations as drafted are not clear and may not achieve this result. The draft Guidance refers only to calculations involving complete months. Workers should be entitled to have leave entitlement calculated pro rata even where part of a month has been worked during the course of employment.

15. As the draft Guidance states, Regulation 15(1A) disregarding fractions of less than one-half of a day's leave refers only to notice requesting leave, not to the calculation of the leave entitlement under Regulation 13 and, consequently, not to the calculation of compensation paid under Regulation 14.

16. This is intended to mean that fractions of days can be taken into account in calculating entitlement under Regulation 14. This depends on Tribunals appreciating the difference between the amount of leave to which the worker is entitled under Regulations 13(1) and 13(2) and the amount of leave which the worker "may take" within Regulation 15(1A). This may cause Tribunals difficulty in view of the wording of Regulations 14(1)(b) and 14(3) both of which (as amended) will refer to Regulation 13 as a whole, not merely to Regulation 13(1)..

17. This reinforces the need for clarification that, so far as the calculation required by Regulation 14 is concerned, the provisions of Regulation 13(2) regarding accrual have no application, so that in Regulations 14(1) and 14(2) the calculation of whether the proportion of leave taken is less than the proportion of leave year expired is calculated purely by reference to the annual figure without any regard to Regulation 13(2).

18. There is a risk that Tribunals will interpret the provisions as drafted in a manner which prevents or restricts entitlement to compensation in relation to those employed on fixed term contracts of less than one year. This arises because Regulation 13(2) refers to the "entitlement" accruing suggesting therefore that where a worker is employed on a short-term engagement of less than one month (or possibly less than 10 days for the reasons explained above) no entitlement would accrue under Regulation 13(2). If so, in making the calculation in Regulation 14(3)(b), a Tribunal may conclude that the "period of leave to which the worker is entitled under Regulation 13" is nil, thus meaning there is no entitlement to compensation under the calculation in Regulation 14(3).

19. The simplest way to remedy this ambiguity is to make clear that leave entitlement is calculated for the purposes of Regulation 14 on a daily basis, so that even a worker who has worked for only a short period of less than a month is entitled to a payment for the proportion of annual leave accrued at the date of termination.

    Problems arising from a system of accrual of entitlement

20. These difficulties arise from introducing a system of accrual of entitlement, rather than leaving the matter to be dealt with by the combined effect of Regulations 13 and 14, with the deletion of Regulation 13(7).

21. An alternative way of dealing with the problem would be to move new Regulation 13(2) to Regulation 15 and amend the wording so that it refers not to the accrual of the entitlement, but to the accrual of the leave which a worker may take.