Working Time (Amendment) Regulations 2007: full-time worker case study

Caroline Blackwood and Carys Wilson of Osborne Clarke continue a series of articles on the Working Time (Amendment) Regulations 2007 with a case study on implementing the Regulations for a full-time worker.

Jeremy works as a warehouse operative for A Limited, a distribution and logistics company. He works from 9 am to 5 pm five days a week. Jeremy's employment contract states that he is entitled to 20 days' annual leave, including bank and public holidays.

Jeremy has heard that a new law is coming into force that will mean that he will be entitled to additional annual leave. Is Jeremy correct?

Yes. Jeremy will be entitled to 24 days' statutory annual leave from 1 October 2007 and 28 days' statutory annual leave from 1 April 2009.

A Limited's leave year begins on 1 April. How many additional days' holiday will Jeremy be entitled to from 1 October 2007?

Jeremy's additional annual leave will be calculated proportionally from 1 October 2007 to 31 March 2008. On 1 October 2007, six months of A Limited's annual leave year will remain, so Jeremy will be entitled to half of the annual increase - ie two additional days from 1 October 2007 to 31 March 2008. He will be entitled to 24 days' statutory annual leave from 1 April 2008 to 31 March 2009. From 1 April 2009 onwards he will be entitled to 28 days' statutory annual leave.

The Government has published a Holiday Entitlement Ready Reckoner (on the DBERR website) to help both employers and workers calculate the new holiday entitlement.

Jeremy is aware that some of his colleagues currently receive 28 days' annual leave including bank and public holidays. Will they also be entitled to an additional eight days' annual leave?

No. Employees who currently receive 28 days' annual leave will not be entitled to the additional eight days' statutory leave. Statutory holiday entitlement will be capped at 28 days. However, employers will still be permitted to give employees further additional contractual holiday if they wish.

Jeremy asks his line manager if he can take paid leave over the Easter bank holiday. Is his line manager obliged to grant his request?

If Jeremy's employment contract states that he will receive paid leave for bank and public holidays, his line manager will be obliged to give Jeremy the time off. However, if this is not the case, his line manager may be entitled to refuse Jeremy's request for time off on a bank holiday. The new provisions do not require employers to allow employees to take the extra eight days' leave on bank and public holidays. Employers will therefore still be able to agree the timing of holidays as they do at the moment, and where an employer needs its workforce to be available to work on bank and public holidays, it will still be able to require this, either by following the statutory procedures for agreeing the timing of holidays under the Working Time Regulations 1998 or through appropriate contractual terms and procedures.

Jeremy plans to go on holiday abroad next year and would therefore like to carry his additional leave entitlement forward into the next annual leave year. Is he able to do this?

Provided that A Limited is happy for him to do so, Jeremy may carry his additional leave entitlement into the next annual leave year.

Is A Limited entitled to replace the additional leave days with a payment in lieu?

From 1 October 2007 to 1 April 2009 A Limited will be permitted to replace the additional leave entitlement with a payment in lieu. However, from 1 April 2009 payment in lieu of the additional leave entitlement will be permitted only on termination of employment. Employees will therefore need to be encouraged to take their full 28 days' leave in the same holiday year, or employers may allow them to carry forward up to eight days.

Jeremy hurts his back and takes four months off work from November 2007 to February 2008. Will he accrue holiday during that period and will he accrue the additional holiday leave to which he would have become entitled from 1 October 2007?

The issue of accrual of holiday during sick leave has been considered in HM Revenue and Customs v Stringer and others (previously known as Commissioners of Inland Revenue v Ainsworth and others [2005] IRLR 465 CA). The Court of Appeal held that a worker who is absent from work during an entire leave year is not entitled to statutory leave for that year. Unfortunately, it did not give any guidance as to how employers should apply this to employees who are absent for only part of the leave year. In addition, the decision has been appealed to the House of Lords, which has made a reference to the European Court of Justice on the interpretation of the Working Time Directive, so uncertainty remains until there is a final decision from the House of Lords.

The safest interpretation for A Limited in relation to Jeremy, who has been off work for four months, will be to allow him to accrue holiday during that period, including the additional statutory holiday to which he is entitled from 1 October 2007. If Jeremy were entitled to more than the statutory minimum holiday entitlement, A Limited could specify in his employment contract that his contractual leave (in excess of the statutory minimum) did not accrue during sick leave.

Next week’s article will feature FAQs on the Regulations.

Caroline Blackwood is a training and know-how associate in the employment, pensions and incentives department at Osborne Clarke (caroline.blackwood@osborneclarke.com) and Carys Wilson is a trainee (carys.wilson@osborneclarke.com).

Further information on Osborne Clarke can be accessed at www.osborneclarke.com.