Annual leave: How Changes in Working Patterns Impact Upon Annual Leave Entitlement

This is a useful decision for employers that will have practical importance when calculating the holiday entitlement of an employee who has changed their working pattern by increasing their hours.

In a nutshell, the European Court of Justice (ECJ) has decided that when a part time employee's working hours increase, their entitlement to annual leave should be recalculated to reflect this increase. However, the recalculation should only be applied going forward and need not be applied retrospectively to the whole leave year.

The Facts

In Greenfield v The Care Bureau Limited, Ms Greenfield was a care worker at The Care Bureau Ltd (CBL). Her contract stated that her working days and hours differed from week to week. As of June 2012, however, Ms Greenfield was working one day a week. Ms Greenfield was entitled to the statutory minimum holiday entitlement under the Working Time Regulations 1998 of 5.6 weeks. Therefore Ms Greenfield's holiday entitlement whilst working this one day a week working pattern was 5.6 days.

In July 2012, Ms Greenfield took seven days of paid annual leave, thereby ostensibly exhausting her annual entitlement.

However, from August 2012, Ms Greenfield's working pattern increased to 12 days on and 2 days off. She requested further leave in November 2012 but this was refused by CBL on the basis that she had exhausted her entitlement for the year.

Ms Greenfield brought a claim in the Employment Tribunal for an allowance in lieu of leave not taken. Ms Greenfield argued that as her working pattern was now full-time she should be entitled to 28 days of annual leave rather than the 5.6 days given to her by CBL. The Tribunal initially held in her favour but revoked its Judgment following a request for reconsideration by CBL and referred the matter to the ECJ.

The ECJ's Decision

The ECJ confirmed a number of principles for dealing with the calculation of holiday entitlement where part-time employees increase their hours part way through a leave year:

• First, it is necessary to distinguish periods during which employees work different working patterns. The accumulation of annual leave for these periods should be calculated separately and the calculation for the later period does not have to be applied retrospectively to the whole leave year.
• Second, where the annual leave taken during the earlier part-time period exceeds the entitlement accrued in that period, the excess should be deducted from the newly accumulated annual leave entitlement accrued during the later full-time or increased part-time period.
• Third, the approach to these calculations is the same on termination when working out payment in lieu of figures as it is when the employment relationship is ongoing and an employee's entitlement to remaining leave needs to be calculated.

Best Practice

The decision is not particularly surprising and provides a sensible and intuitively fair approach to the calculation of the holiday entitlement of part-time employees.

For more information, please contact Sarah Want in our Employment Law on 0117 314 5363.