Lately, the European Court of Justice decided on two cases – Williams et vs British Airways and Lock vs British Gas – that deal with payments, other than basic wages, considered due to employees when they would be availing themselves of their vacation leave entitlement.
Basically, what the rulings want to establish is the concept that allowances, paid to employees for particular features prevailing in the normal delivery of duties, (say, flying allowances for pilots and commissions for salespersons), should remain payable during non-work days, that is during vacation days.
As is to be expected, the ECJ has come up with a sort of legal argumentation to justify these rulings. It seems that the inspiration for this argumentation has been a particular aspect of the Organisation of Working Time Directive.
This directive goes into the aspect of ease of utilisation of vacation leave by employees. It hints that employees should in no way be discouraged from making use of their vacation leave entitlement, because it is an essential benefit that allows an employee due rest and recreation, which is required for a balanced and healthy life that, in turn, impacts on safety at the place of work. So far so good.
The ECJ then proceeds to argue that pilots on vacation, as they will not be flying, will not earn an allowance and salespersons on vacation, as they will not be selling, will not be earning any commissions. According to the judgment such pilots and salespersons, at the thought of losing such payments, will feel disincentivised to go on vacation leave. By doing so, they will prejudice and harm themselves.
The ECJ concluded that this amounts to an infringement of the Working Time Directive. Therefore, to solve this so declared infringement, the Court established that pilots and salespersons, much as they will not be flying or selling, should anyway receive their allowances and commissions, in whole or in part, to be able to enjoy their vacations.
The ECJ has conceded to the different EU members the task of establishing the actual quantum that should respectively be paid and it need not be the ‘full’ amount that might have been earned had the vacation days been worked.
Employers here earnestly hope that, if and when, it is decided that these rulings apply to Malta too, caution and moderation will prevail.
Gratuitously raising the cost of labour is not the recipe for economic recovery
Needless to say, employers are somehow at a loss to understand and appreciate these ECJ rulings.
The payment of a ‘flying allowance’ to employees whose primary task is to fly is already an absurd way of computing the remuneration of pilots. To add on to this absurdity by paying such an allowance to grounded pilots on vacation is beyond explanation.
The payment of a commission to salespersons on vacation, when they would not be effecting sales, also cannot be considered logical.
The payment of a commission is deemed to be an incentivising tool to encourage a good effort to achieve sales. How can I, or why should I, incentivise you to sell, through the payment of a commission, when, simultaneously, I am telling you not to sell but to go on vacation leave?
This seems to be a classic example of a European Union very long on dubious and costly rights of employees and very short on their duties and obligations. A European Union seemingly oblivious to a recession that is laying to waste European employment levels.
It does not take much to understand that raising the cost of labour, even marginally, is not the recipe for economic recovery.
At the moment, we should be focusing on the injustice of unemployment and we should be doing everything possible to create jobs for the unemployed. Under these circumstances, there is an element of immorality in cushioning further the gainfully employed at the expense of the unemployed. It seems that the EU can afford the luxury of judges, remote from the day-to-day reality of life, engaging in airy fairy intellectual debates that result in measures that carry a significant negative economic impact.
Well, if it has to be this way, so be it, but then we should stop being surprised that the EU is losing out on competitiveness, growth and the creation of long-term gainful jobs.
The Lisbon Agenda proved, and the 2020 objectives might also prove, to be nothing but empty talk. In face of the global economic threats and challenges, coming from the likes of China and India, the EU responds with more ‘social’ Europe.
In conclusion, nothing much can be done to undo the aforementioned ECJ rulings. It is, however, earnestly hoped that these decisions are not pushed to further absurd lengths.
The ECJ-inspired holiday pay enhancements must be circumscribed. They must not be allowed to overspill to other absolutely no-go areas like overtime and shift allowances. As argued, the ECJ rulings are manifestly flawed and if they cannot be overturned, at least, the damage must be contained.
Arthur Muscat is president of the Malta Employers’ Association.