Tag Archive: holiday

Hearing date set for important holiday pay calculation cases

Kate Hodgkiss, Partner in our Edinburgh office, comments: The EAT has now listed the cases of Bear Scotland Ltd v Fulton and Neal v Freightliner Ltd to be heard on 30 and 31 July 2014. The EAT’s findings will determine whether payments in respect of non-guaranteed overtime have to be included in the calculation of holiday pay.  This issue is deemed to be of such importance to employers that BIS has been granted leave to intervene in the proceedings.

Until recently, the legal position seemed to be clear. In 2004, a Court of Appeal case, Bamsey v Albon Engineering & Manufacturing PLC, held that only guaranteed (ie obligatory) overtime needed to be included in holiday pay calculations.  However, in  2011, the ECJ indicated in British Airways Plc v Williams, that all payments which are intrinsically linked to the performance of the contract must be included in holiday pay calculations.  This led the employment tribunals in Fulton and Neal to find that regular overtime should be included in the respective employers’ holiday pay calculations, even if that overtime was not obligatory.

The outcome of these cases has potentially significant ramifications for employers who are currently only including basic remuneration in their holiday pay calculations. Employees may seek to claim any holiday pay underpayments, potentially going back a number of years, and this could result in significant costs liabilities for employers.  Employers therefore need to make an important decision now as to whether to sit tight and await the outcome of the EAT’s decision or to take steps at this stage to minimise any potential liabilities. We will continue to report any future developments in Be Aware.

Permanent link to this article: https://www.dlapiperbeaware.co.uk/hearing-date-set-for-important-holiday-pay-calculation-cases/

December 2013’s review of the year

Sandra Wallace, Partner and Employment group head, highlights the most important legislative and case law developments from 2013 and identifies the key cases to watch out for in 2014.   Remember to use our On the horizon legislation tracker to keep up to date with the further changes to legislation which are expected in 2014 and beyond.



Employment Tribunals

1 February Cap on a week’s pay for statutory awards increased from £430 to £450
  Unfair dismissal compensatory award increased from £72,300 to £74,200
25 June In political affiliation cases the two year unfair dismissal qualifying period no longer applies
29 July One year cap on unfair dismissal compensatory award introduced
  Protection of settlement negotiations from admissibility in unfair dismissal tribunal proceedings introduced
  Introduction of fees regime for employment tribunal claims and new tribunal rules
  Compromise agreements renamed ‘settlement agreements’
7 October New fee remission system in force for employment tribunal fees

Family friendly

8 March Parental leave increased from 13 to 18 weeks
7  April Statutory maternity, paternity and adoption pay rates increased from £135.45 to £136.78 per week


25 June Amendments to whistleblowing legislation to remove good faith requirement and introduce public interest test
1 November

Close of call for evidence on further whistleblowing reform


1 February Cap on a week’s pay for statutory redundancy payments increased from £430 to £450
6 April Period of required collective consultation for 100+ redundancies reduced from 90 to 45 days

Employment status

1 September Employee shareholder status introduced


25 June Obligation for the Government to make an order outlawing caste discrimination came into force
1 October Repeal of third party harassment provisions from Equality Act 2010





USDAW and others v WW Realisation 1 Ltd and others This case involves the redundancy consultation obligations arising out of the closure of Woolworths and Ethel Austin stores between 2008 and 2010.   The EAT ruled that the words “at one establishment” in the UK’s collective redundancy legislation should be disregarded for the purposes of any collective redundancy involving 20 or more employees. This potentially results in employers needing to collectively consult whenever they propose to make 20 or more redundancies in a 90 day period, regardless of where the employees are based.  This case is however being appealed to the Court of Appeal.

Working time

Neal v Freightliner Ltd


An Employment Tribunal held that a freight worker was entitled to have overtime payments and shift premiums included in the calculation of his holiday pay as they were intrinsically linked to the performance of the tasks he was required to carry out under his employment contract.  This case is being appealed to the EAT.

Employee competition

Coppage and anor v Safety Net Security Ltd The Court of Appeal upheld an order that a former company director pay at least £50,000 following a breach of his post-termination restrictive covenants which prohibited solicitation of any customers of his former employer for a period of six months following termination.
Vestergaard Frandsen SA v Bestnet Europe Ltd The Supreme Court held that a former sales manager was not liable for misuse of confidential information.  The manager had not acquired information while working for Vestergaard and had no implied knowledge of the misuse of information by her new employer.

Transfer of undertakings

Alemo-Herron and others v Parkwood Leisure Ltd

Considering the status of collective agreements following a TUPE transfer, the ECJ decided that under the Acquired Rights Directive it is impermissible for UK courts to adopt a “dynamic” rather than a “static” interpretation.  Where transferring employees’ contracts provide that their terms are to be determined in accordance with collective agreements, the transferee cannot be bound by terms which are collectively agreed after the transfer if it is unable to be involved in the negotiating process.

Crystal Palace FC Ltd v Kavanagh & Ors

In a case which arose out of the dismissal of employees of the company which owned Crystal Palace football club when it went into administration, the Court of Appeal held that the employees were dismissed by the administrator shortly before the business was sold for a valid “economic, technical or organisational reason”. The administrators needed to reduce the wage bill in order to continue running the business and avoid liquidation.


Lockwood v Department of Work and Pensions

The Court of Appeal held that a severance scheme, which paid higher payments to older employees on the basis that they needed more of a cushion than younger employees, was objectively justified.

Cox v Essex County Fire and Rescue Service

In this disability discrimination case, the EAT decided that although the employee had advised that he was suffering from bipolar disorder, the absence of a definite diagnosis meant that the employer did not know, and could not have reasonably been expected to know, that the employee was disabled.

Croft Vest Ltd & Ors v Butcher

The EAT held that an employer who refused to pay for an employee with work-related stress and depression to have private psychiatric counselling and cognitive behavioural therapy breached its duty to make reasonable adjustments.



USDAW v Ethel Austin Ltd (in administration) and another case


The Court of Appeal will consider whether the words “at one establishment” in the UK’s collective redundancy legislation should be disregarded for the purposes of any collective redundancy involving 20 or more employees. (NB. this is the Woolworths case  – see above for EAT decision).
Lyttle and others v Bluebird UK Bidco 2 Ltd In an application from a Northern Ireland employment tribunal to the ECJ, clarification is sought as to the meaning in the UK’s collective redundancy legislation of the term “establishment” and whether the duty to collectively consult is triggered when 20 or more employees are dismissed at a particular establishment or across the whole of the employer’s business.

Working time

Lock v British Gas Trading Limited and others The ECJ will consider whether the holiday pay of a worker, who receives basic pay and sales-related commission, should be more than just basic pay, even though during holiday periods they are not undertaking work that would entitle them to commission.
Neal v Freightliner Following the Employment Tribunal in 2013 (see above), the EAT will consider if holiday pay must be calculated in a way which takes account of pay for voluntary overtime.


Z v A Government Department & the Board of Management of a Community School;    CD v ST There are currently two cases before the ECJ which will consider whether an mother who has a child via a surrogacy arrangement has pregnancy and maternity rights under EU law.
FOA on behalf of Karsten Kaltoft v Billund Kommune The ECJ will consider whether discrimination on grounds of obesity is prohibited by EU discrimination law.

Gallop v Newport City Council


Judgment is awaited in this case in which the Court of Appeal has considered if an employer’s lack of knowledge prevents the duty to make reasonable adjustments arising where the employer relied on advice from an occupational health adviser that an employee was not disabled for discrimination purposes.

Mba v Mayor and Burgesses of the London Borough of Merton

Judgment is awaited in this case in which the Court of Appeal has considered whether or not an employer’s requirement that all care workers work some Sunday shifts indirectly discriminated against a Christian residential care worker who strongly believed that Sunday should be a day of rest.

Employment law reforms

R (on the application of UNISON) v Lord Chancellor


Judgment is awaited in this case in which the High Court heard an application by UNISON claiming that the introduction of employment tribunal fees is in breach of EU law and contrary to the principle of access to justice.    A similar application to the Scottish Court of Session has been stayed pending the outcome of the High Court case.

R (on the application of Compromise Agreements Ltd) v Secretary of State for Business, Innovation and Skills

An application has been made for judicial review of the statutory cap of one year’s salary in unfair dismissal cases. The application is based on the premise that older people are more likely to be out of work for more than a year and therefore would be eligible to more than a year’s compensation were it not for the new cap.

Permanent link to this article: https://www.dlapiperbeaware.co.uk/december-2013s-review-of-the-year/

Employment law reforms continue apace: but no sign of any measures dealing with holiday and sickness absence

Kate Hodgkiss, a Partner in our Edinburgh office, comments:

As the holiday season gets well underway, employers may well be wondering when they will finally have a clear understanding of their workers’ holiday entitlements; after all, it is quite some time since Stringer made its mark in 2009 and left the whole question of the impact of sickness absence on holiday entitlement well and truly up in the air.  The Government initially responded positively to this, launching a consultation in May 2011 with its proposals for sorting out the conflict between UK and European law over this perennial HR issue.  However, the consultation closed in August 2011, and despite almost daily announcements about other employment law reforms, we have yet to see anything which clears up one of the most important, and common, issues employers have to manage.

By way of reminder, the UK’s Working Time Regulations 1998 (WTR) adopt a ‘use it or lose it’ approach to holiday entitlement.  On the face of it, therefore, workers who have not used up their full statutory holiday entitlement by the end of a holiday year have no right to carry forward the unused holiday into the next holiday year.

In Stringer, however, the ECJ decided that if workers are unable to take their holiday during the holiday year because of sickness absence, they must be allowed to carry it forward into the next holiday year.  Shortly after Stringer, the ECJ gave another judgment in the case of Pereda. Here, the ECJ found that where a worker’s prearranged holiday coincides with a period of sick leave, the worker is entitled to take their holiday at an alternative time.   The ECJ then  gave judgment in the Schulte case finding that there is a limit to the length of time that a worker on long term sick leave can continue to carry over untaken statutory holiday (in this case 15 months).  Schulte was then followed by the ANGED case which confirmed that a worker who becomes unfit for work during a period of statutory holiday must be entitled to reschedule the leave and that a worker who becomes unfit for work before a period of holiday must be able to take the holiday at a later date.

None of these findings are reflected in the WTR and therefore we are left with a direct conflict between the provisions of the WTR and European case law.  In practice, this means that employment tribunals have had to interpret the WTR to give effect to the case law, and this has resulted in conflicting decisions.  Although the issue was finally considered at Court of Appeal level in the Larner case, some questions still remained unresolved,  leaving employers with ongoing uncertainty as to their obligations towards their workers.

The Government set out in its Modern Workplaces consultation its proposals for bringing UK law into line with the European case law. The proposals include amending the WTR to:

  • Allow a worker to carry over their holiday into the following leave year in circumstances where the worker has been unable to take their annual leave due to sickness absence, or falls sick during scheduled leave, and it is not possible to reschedule the leave in the current holiday year.
  • Allow an employer to insist that leave that is untaken due to sickness absence should be taken in the holiday year if there is still an opportunity to do so and, conversely, allow an employer to require unused leave to be carried forward to the following leave year if there are good business reasons.
  • Limit the entitlement to carry leave forward to the four week leave entitlement provided for by the Working Time Directive (WTD) (so that an employer will not have to permit a worker to carry over the extra 1.6 weeks provided for in the WTR)
  • Require a payment in lieu of untaken holiday on termination of employment to include payment in respect of any untaken carried over leave.
  • Limit the ability to reschedule leave within the leave year where a worker has been sick whilst on scheduled annual leave to the four weeks’ leave provided for by the WTD.
  • Specify the order in which leave will be deemed to be taken, with the leave provided for by the WTD being taken first.

These proposals will bring some welcome clarity to this troubled area and assist employers to understand, and potentially limit, their obligations to their workers.  Employers will be able to review their contracts and procedures and take appropriate steps to ensure they are legally compliant.

It is about time that Stringer’s loose ends were neatly tied together – it is to be hoped that amongst the many reforms on the Government’s agenda, this one finally rises to the top and that the next announcement will be the one employers are really waiting for – an end to their holiday/sickness absence headache.

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Permanent link to this article: https://www.dlapiperbeaware.co.uk/employment-law-reforms-continue-apace-but-no-sign-of-any-measures-dealing-with-holiday-and-sickness-absence/

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