The ECJ has confirmed that if a part-time worker increases their working hours, then their holiday entitlement must be recalculated from the point that the working hours increase. However, there is no obligation to recalculate the entitlement on a retrospective basis. Instead, different calculations will be required for the distinct periods of work (Greenfield v The Care Bureau Ltd).
The ECJ has previously decided that it is unlawful for member states to have national laws which reduce the accrued holiday entitlement of workers when they move from full-time to part-time work (Zentralbetriebsrat der Laneskrankenhauser Tirols v Land Tirol, 2010). In other words, a part-time worker retains the right to untaken holiday which had accrued when working on a full-time basis, and the employer is not entitled to adjust that accrued entitlement to reflect the reduction in working time. However, the holiday entitlement may be recalculated from the point that the working pattern changes.
In this case, the ECJ had to decide the reverse situation i.e. what happens to a worker's holiday entitlement when their working hours increase?
The claimant was employed as a care worker from June 2009 to May 2013. Although her hours varied from week to week, at the relevant time she was working 1 day per week. In July 2012, she took holiday in excess of her pro-rated entitlement for the year (she took 7 days' leave, when she was only entitled to 5.6 days' leave per year).
The following month, the claimant increased her working hours and began working a pattern of 12 days on, 2 days off. She asked for a further week's leave and the employer refused the request on the basis that she had already taken more than her annual entitlement in July that year.
After the termination of her employment, the claimant brought an Employment Tribunal claim and successfully claimed a payment in lieu of accrued but untaken leave. The employer applied for a reconsideration of the decision, arguing that the claimant had taken holiday in excess of her annual entitlement and no further payment was due. The claimant maintained that her holiday entitlement should be recalculated following the increase to her working hours both prospectively and retrospectively.
The Employment Tribunal revoked its judgment and made a reference to the ECJ, asking whether holiday entitlement had to recalculated when a worker's hours increased and, if so, did this apply retrospectively, as well as prospectively?
The ECJ considered the Land Tirol decision and concluded that periods of holiday must be calculated separately for each period where the working pattern differs. This meant that a recalculation of holiday is only required from the point at which the working pattern changes. However, there is no requirement to recalculate holiday accrued under the previous working pattern.
The Court also said that where the amount of holiday taken during a period of part-time work exceeds the entitlement for that period (as was the case here) then the employer is entitled to deduct the excess from the newly-calculated entitlement.
Finally, the Court held that the approach to the calculation of entitlement to paid holiday remains the same upon the termination of employment. Workers are entitled to receive their "normal pay" whilst on holiday. If there are unable to take their holiday before termination, then they are entitled to a payment in lieu, which would put them in a position comparable to the one they would have been in had they taken the leave. It will be for national courts to determine how "normal pay" is to be calculated; where pay consists of several elements then a "specific analysis" will be needed.
This case helpfully confirms that employers do not need to retrospectively increase a worker's holiday entitlement if they increase their working hours. In line with the ECJ's approach in Land Tirol, the case confirms that the recalculation of leave only applies from the point that working hours change.
Where there is a change in working hours, employers must calculate different holiday entitlements for the different periods. This raises the question of whether the 12-week reference period used to calculate holiday pay for certain types of workers in the UK is consistent with EU law. For example:
- A full-time worker is remunerated by way of basic pay plus variable commission payments.
- The worker reduces their hours of work but retains an entitlement to holiday accrued when they worked on a full-time basis.
- After a several months of the new part-time arrangement, the worker takes some of the accrued "full-time" holiday.
- The employer calculates the worker's holiday pay for this period using a 12-week reference period based on their new part-time earnings. The worker's part-time earnings are considerably lower given the reduced opportunity to earn commission.
- Is this approach consistent with the Directive's requirement that the worker must receive their "normal pay" or would it amount to less favourable treatment of a part-time worker?
Unfortunately, this decision does not help answer this issue beyond stating that a "specific analysis" will be needed.