The Working Time Regulations 1998, which give effect to the EU's Working Time Directive, seem to be coming up time and time again in recent case reports. Here, we set out three recent themes arising – and what they might mean for employers.

What is working time anyway?

Although it is only the Opinion of an Advocate General (and, therefore, not binding on the ECJ itself, which will make its decision at a later date), the recent case of Federación de Servicios Privados del sindicato Comisiones Obreras v Tyco Integrated Security SL and another (C-266/14) has helped to define the working time of mobile workers (those workers who do not have a fixed workplace). 

In this Spanish case, technicians were employed to install and maintain security systems across Spain. Each technician was assigned to an area which could require him to travel up to 100km away from home using a company vehicle. The employers had recently restructured their organisation, so that technicians were technically assigned to one central office in Madrid, rather than a number of local offices. The employers measured working time as beginning on arrival at the client, rather than on leaving home, and ending when the technician left his final appointment of the day, no matter how long it would take him to get back.

Under Spanish national law, time spent travelling between a worker's home and workplace is not working time, since workers are generally free to choose where to live. However, these technicians were being told what route to follow and where to go; accordingly, they could not choose how close they lived to work, and the Spanish court took the view that travelling time could not be rest time.

The Advocate General said that, in order to be working time under the Working Time Directive, workers must be at the workplace, at the disposal of their employer, and carrying out their activity or duties. "Place of work", for peripatetic workers, cannot be reduced to their presence on customer's premises and for these technicians, travelling from one customer to another as instructed must be working, and must be part of their activity or duties. In the Advocate General's opinion, travelling to the first customer, and home from the last, are still subject to the employer's authority, since these employees could still be phoned to stop at another customer, or to cancel another appointment, en route.

When the technicians were assigned to local offices, they had started each day at that office and their travelling time to the first and last customers had been working time. He could see no reason why that should change simply because those offices no longer existed and now the employees' journeys started and ended at home.

Do you trust your employees?

The employers had expressed concern that, if travelling time was included, workers would carry out personal business on the first and last journeys of the day. The Advocate General said that this risk did not alter the legal nature of the time spent on these journeys. Employers worried that this might be the case should put monitoring procedures in place to avoid this (perhaps easier if, as in this case, the employer was providing the vehicle) and he added somewhat tartly that any administrative burden resulting from this is merely the result of choosing to abolish fixed places of work.

Enough about working. How do you calculate holiday pay?

As previously reported, an appeal in Lock v British Gas was lodged with the EAT on 1 May 2015.  The ECJ held previously that, where a worker's remuneration includes contractual commission, determined with reference to sales achieved, the Working Time Directive precludes a national law that calculates statutory holiday pay based on basic salary alone. If commission payments are not taken into account, the worker will be placed at a financial disadvantage when taking statutory annual leave; no commission will be generated during the holiday period. In such circumstances, the worker might be deterred from exercising the right to annual leave. This would be contrary to the Working Time Directive's purpose.

After its trip to Brussels, Lock returned to the Leicester employment tribunal. The tribunal held it is necessary to add words to the Working Time Regulations 1998 to give effect to the Working Time Directive and the week's pay provisions of the Employment Rights Act 1996, should be re-written for the purposes of the Working Time Regulations so that commission and similar payments are included in holiday pay.

British Gas is appealing this decision in the EAT. It will argue that commission and non-guaranteed overtime are dealt with under different provisions and the tribunal had been wrong to decide that Bear Scotland, a case about overtime, had any bearing on the outcome of Lock. It will also argue that the EAT in Bear Scotland incorrectly concluded that domestic legislation could be interpreted purposively to give effect to EU law.

Meanwhile, where does that leave overtime? Bear Scotland v Fulton held that non-voluntary overtime should be included in holiday pay, but Neal v Freightliner, a case about voluntary overtime, settled. However, the Court of Appeal of Northern Ireland has recently heard an appeal from the Northern Ireland Industrial Tribunal (there is no equivalent of the Employment Appeals Tribunal) inPatterson v Castlereagh Borough Council which, although not binding on the rest of the UK, is nonetheless of persuasive interest.

Patterson v Castlereagh Borough Council

Mr Patterson was employed by Castlereagh Borough Council (the Council). He regularly worked overtime on a voluntary (non-compulsory) basis for which he was paid at the rate of time and a half. His holiday pay was calculated by reference to his basic hours only, without taking into account his voluntary overtime. He brought proceedings as the lead claimant in a multiple claim in the Northern Ireland industrial tribunal, claiming that he had suffered an unlawful deduction from wages and the Council was in breach of the Northern Ireland Working Time Regulations 1998 (NI WTR). These implement the EU's Working Time Directive in Northern Ireland, and are substantively the same as the Working Time Regulations in force in the rest of the UK.

The tribunal rejected his claim. He appealed to the Northern Ireland Court of Appeal, which held that the tribunal had erred in finding that voluntary overtime could not, as a matter of principle, be included in statutory holiday pay. It is a question of fact for each tribunal to determine whether voluntary overtime is normally carried out, and if so whether the remuneration received is sufficiently permanent to be included in statutory holiday pay. (It seemed that the tribunal in this case had not been given details of the regularity of Mr Patterson's overtime, which may have contributed to its decision.) It remitted the case for the tribunal to consider further evidence of the overtime actually worked by Mr Patterson.

How firmly can this case be relied upon?

Aside from being a Northern Irish case which will not bind the rest of the UK, the court noted that the Council had conceded that it would have been an error if the tribunal had found that Article 7 of the Working Time Directive did not require voluntary overtime to be taken into account in calculating holiday pay. The case had not therefore been fully argued before the court and for that reason, it warned that its decision was necessarily expressed in "short form" and had to be read "in this light and with that degree of caution attached to them."

But what if you can't take your leave in the year in which it accrues?

Forget the calculation of holiday pay: a few years ago, this was the big question for employers and employment lawyers. A series of cases starting with Pereda v Madrid Movilidad established that if a worker was unable or unwilling to take holiday because he or she was unwell, the worker should be entitled to carry it forward. The question then became – but for how long?

Plumb v Duncan Print Group Ltd concerned an individual who was off work on sick leave from April 2010 until his employment terminated in 2014. In July 2013, he had written to his employer asking to take the annual leave he had accrued since 2010. His employer agreed to pay him for the leave accrued in the current leave year 2013/14, but not for any holiday from previous years. He brought a claim for payment in lieu when his employment terminated.

The tribunal decided that the key issue was whether he was unable to take holiday in the earlier years because of sickness. In the absence of what the tribunal considered to be sufficient evidence of his being "unable" to take his leave, it concluded that he could have done and rejected his claim. 

The Claimant appealed. The EAT agreed that he was not required to establish that he was unable to take leave – it was sufficient that he was on sick leave and did not choose to take leave during the relevant leave years. European and UK case law indicated that, if a worker is not permitted by contract or legislation to take annual leave during a period of sick leave which coincides with a leave year, then the worker is allowed to take annual leave in a subsequent leave year. If, on the other hand, he or she is permitted to take annual leave while on sick leave, he or she may either take annual leave during the sick leave or take it at a later date.

The EAT held that a worker who is absent from work on sick leave does not have to prove that he or she is physically unable to take holiday because of his or her illness. Where, as here, there was no evidence that the Claimant had tried to take sick leave whilst on holiday (although permitted to do so in the UK), it had to be inferred that he did not wish to do so – and accordingly, he was entitled to carry it over.

How far should carry-over extend?

In KHS AG v Schulte, the ECJ held employees on long-term sickness absence cannot carry over untaken holiday indefinitely. In that case, the Advocate General recommended a limit of 18 months; in its judgment, the ECJ said that the carry-over period should be significantly longer than the leave year and held that a 15 month period was not a breach of the Directive without indicating whether this was a minimum in all cases, or specific to the facts.

The EAT noted that Reg 13(9) of the Working Time Regulations 1998 provides that annual leave must be taken in the year in which it is due unless the worker was unable or unwilling to take leave whilst off sick. If that was the case, a limit of 18 months should be read into the Working Time Regulations, which would permit a worker to take annual leave within 18 months of the end of the leave year in which it accrued where he or she was unable or unwilling to take annual leave because of sickness.

In this case, therefore, the Claimant was entitled to payment in lieu of annual leave for the 2012/13 leave year (since the end of the year was within 18 months of his termination in February 2014) but not for earlier years.