At EU level, the Organisation of Working Time Directive guarantees the right of every worker to receive annual paid leave. Part-time workers are required to be treated in a comparable way to full-timers, and to have adequate rest periods. They are entitled to the same level of annual leave entitlement pro rata. This entitlement is calculated as a proportion of the number of weekly hours worked by the part-time employee against the number of the normal weekly hours worked by a full-time employee performing the same work.
Although at first glance holiday calculations may appear a straightforward matter, difficulties may arise when working out the entitlement of employees who work different shifts.
The Court of Justice of the European Union (CJEU) recently considered how an employer should calculate holiday entitlement when a part-time worker increases the hours of work. The question raised before the Court sought clarification on whether entitlement to annual leave already accrued during a particular year has to be recalculated according to the new shift pattern in a retrospective manner, or whether the entitlement had to be recalculated only for the remaining months of that particular year.
The Court’s involvement arose following a preliminary reference procedure initiated before the UK Courts in the matter of Greenfield v Care Bureau Limited.
Greenfield, a care worker, had been employed with the defendant company for four years. In terms of her contract of employment, her working hours and days differed from week to week. In 2012, her work pattern was one day per week and her leave entitlement was calculated on the standard requirement of the applicable UK legislation transposing the EU directive. She took her leave entitlement for that year in July. The following month her shift pattern changed, and her weekly working hours increased to an average of six days per week.
In November she requested a week of paid leave, a request that was turned down by her employer on the basis that she had exhausted her leave entitlement for that year. Her employer calculated her leave entitlement on the working pattern for the period prior to her leave request.
Greenfield ceased working for the defendant company some months later. She brought a claim for payment of untaken annual leave against her previous employer before the Birmingham Employment Tribunal arguing that leave already accrued and taken should be retrospectively adjusted following an increase in working hours.
The tribunal upheld her claim. Arguing that such retrospective recalculation and adjustment was not contemplated under EU law, the employer filed appeal proceedings that were stayed in order to make a reference to the Luxembourg Court for guidance.
The English Court requested clarification from the CJEU. In its ruling, the Court of Justice provided some clarity on leave entitlement of employees whose working days or hours change within the leave year and, in particular, whether an employee who has used up that year’s leave gains new leave entitlement when their weekly working hours increase. The guidance provided by the Court is of great importance to employers whose employees are engaged on casual or flexible arrangements.
The Court held that annual leave entitlement must be calculated by reference to the days, hours and/or fractions of days or hours worked and specified in the contract of employment. It concluded that the holiday entitlement already accrued need not be recalculated retrospectively to take account of the increase in working hours during a particular year. Therefore, the accrual of leave entitlement must be calculated on the work pattern undertaken by the employee at the relevant time. However, future holiday entitlement should be recalculated to reflect the changed working patterns.
In other words, if working hours have changed during the holiday year, different calculations may need to be made for different periods. Any holiday the employee had taken under her previous working pattern (which exceeded her right to paid annual leave at that time) should be deducted from the ‘new’ entitlement accumulated in the period in which she worked increased hours.
The Court clarified that the situation is exactly the same whether the individual is employed (and is seeking to take paid annual leave) or employment has terminated (and the individual is seeking to be paid for accrued but untaken leave).
In a previous judgment delivered by the Luxembourg Court, it was already established that when moving from full-time to part-time work, an employee’s accrued holiday entitlement cannot be reduced. It makes sense therefore that, where the reverse occurs, entitlement to holiday should not be retrospectively increased.
jgrech@demarcoassociates.com
Josette Grech is adviser on EU law at Guido de Marco & Associates.