Richard Lees, Partner

Adams and another v Harwich International Port Ltd ET/1503084/10 & ET/1503085/10

Date added: 13 October 2011

This case concerns the complicated relationship between sickness absence and annual leave, the law surrounding which is in an unsettled state.

Practical tips

There is no doubt that the Working Time Regulations 1998, as they currently stand, are not compliant with the Working Time Directive as interpreted by the ECJ.

However, until the Government amends the Regulations (which it has proposed to do, and consulted on), tribunals and courts will be forced to read words into the Regulations to ensure workers are afforded their rights under the Directive.

This situation is far from ideal, as different courts and tribunals may have different ideas about what the Regulations should say, leading to uncertainty for claimants and respondents alike.

The company in this case operates Harwich Port, and employs Mr Adams as a traffic controller. It also employs Mr Hunwick as a port controller, and both men each have over 30 years’ service. Their contractual paid holiday entitlement is 33 days per year. Their working patterns are complicated, in accordance with a shifting roster pattern of varying hours. The company has an arrangement where, for payroll and administrative purposes, it obliges employees to take a proportion of their annual leave at designated times throughout the year.

The employees have no contractual entitlement to carry over unused holiday from one leave year to the next, with leave years coinciding with calendar years.

Mr Adams was off sick for over eight months, from July 2009 to March 2010, spanning the 2009 and 2010 holiday years. Mr Hunwick was off sick for over four months, from January 2010 to June 2010.

Neither employee took or asked to take annual leave while off sick, nor did the company notify them that they should. After a failure by the union to obtain a clear answer from the company regarding the issue of accrued holiday and sick leave, the employees raised the matter themselves.

On 11 November 2010, they sent the company similar letters, in which they formally requested annual leave that they had claimed to have accrued during their sickness absences. They stated that:

• they had accrued annual leave while off sick;
• this accrued leave was 27 days for Mr Adams, and 12 days for Mr Hunwick;
• they wished to take the vast majority of that accrued leave on specified dates in 2010; and
• in respect of the leave they did not wish to take in 2010, or where the company was unable to accommodate their leave requests for 2010, the company should agree to them carrying over that leave to the next leave year.

The company replied on 3 December 2010, refusing the requests for leave and stating that the employees’ assertions were “not correct”. Although the company’s responses to the employees were confusing and ambiguous, the tribunal later had “no difficulty” in finding that they refused to permit the employees to exercise the rights asserted in the letters of 11 November 2010. The employees certainly saw the company’s responses in this manner, and brought tribunal proceedings.

The employees argued that the company had refused to permit them to exercise their rights under the Working Time Regulations 1998 (SI 1998/1833) to accrue annual leave while off sick and carry it over, where required, to the following leave year. The employees presented their claims in respect of both the “basic” four weeks’ leave and the additional 1.6 weeks’ leave under the Regulations.

The tribunal noted that the law in this area is “unsettled”, and that the domestic position under the Regulations must be set against the jurisprudence of the European Court of Justice (ECJ). As read, the Regulations do not generally permit the carry-over of statutory annual leave. However, the ECJ has held that, where a worker is prohibited from taking annual leave due to sickness, he or she must be allowed to take that leave at another time and, if necessary, during the following leave year.

The tribunal confessed that the rationale of the EU jurisprudence that requires the carry-over of untaken annual leave accrued during sickness absence eluded it. It was not persuaded that the right to carry forward untaken, paid annual leave accrued on sick leave is “open ended”, so that such leave may be accumulated and carried over from year to year indefinitely. It considered that it was “logical to extrapolate” the existence of a point when the time delay between the accrual of annual leave and the taking of that leave no longer serves but confounds the legislative purpose behind annual leave, which is to improve and protect the health and safety of workers by providing them with minimum periods of rest and adequate breaks.

However, the tribunal also considered that the present state of the law is that:

• workers have a right to accrue 5.6 weeks’ annual leave, including while on sick leave, and cannot be required to take annual leave at the same time as sick leave;
• a worker must be afforded the opportunity to take such accrued leave within the current leave year so far as he or she is able to do so to enjoy it for the intended health and safety purpose of rest and recuperation from work; and
• insofar as a worker is not able to take such leave within the current leave year for reasons relating to sickness absence (or because the employer for good business reasons requires it to be taken at a later date), it may be carried over to the next leave year.

The tribunal held that the Working Time Regulations 1998 are incompatible with the Working Time Directive (03/88/EC), but can be made compliant by reading the relevant sections in accordance with the interpretation put on the Directive by the ECJ, under the principle set out in EBR Attridge Law LLP and another v Coleman (No.2) [2010] IRLR 10 EAT. The tribunal also found that the additional 1.6 weeks’ leave provided under the Regulations should be treated in the same manner, for these purposes, as the basic four weeks’ entitlement derived from the Directive.

The tribunal held that Mr Adams and Mr Hunwick were entitled to carry over the annual leave accrued during their sickness absences to the following leave years, and that the company had refused to permit them to exercise their right to do so.

THE BACKGROUND

The AWR are based around equalisation of pay and rights between agency workers and permanent workers and will come into force on 1 October 2011. Their objective is to ensure that agency workers receive the right to the same basic working and employment conditions as those in the equivalent permanent job recruited directly by their host organization.

The legislation gives Agency Workers entitlement to the same basic employment and working conditions as if they had been recruited directly, if and when they complete a qualifying period of 12 weeks in the same job. Most businesses will need to know what the Regulations mean for them. Agency workers make up some 4% of the UK workforce. If you are an employer and hire temporary agency workers through a temporary work agency (TWA), you will be required to provide your agency with up to date information on your terms and conditions so that they can ensure that an agency worker receives the correct equal treatment, as if they had been recruited directly, after 12 weeks in the same job. You will also be responsible for ensuring that all agency workers can access your facilities and are able to view information on your job vacancies from the first day of their assignment with you.

IF YOU DON’T COMPLY. The Employment Tribunal will assign the liability to whichever organisation(s) it decides has caused the disadvantage to the worker.  If the agency can show that it has made all reasonable efforts to establish and apply equal treatment, then the liability will lie with the hirer or some other part of the chain. Failure to provide the day 1 entitlements lies solely with the hirer.

This is an important shift in the responsibility placed upon employers. If you need advice please contact us.