In the recent case of Greenfield v The Care Bureau Ltd the Court of Justice of the European Union (CJEU) considered how an employer should calculate holiday entitlement where a worker has increased their working hours during the holiday leave year. The CJEU held that the employer is not required to retrospectively recalculate any entitlement to paid annual leave already accrued in light of the worker’s new work pattern; however, a new calculation must be carried out for the period during which the working hours changed.
Ms Greenfield was employed as a care worker by Care Bureau Ltd (CB) from 15 June 2009 (the date her leave year began each year) to 28 May 2013. Her contract provided that working hours and days differed from week to week. In accordance with the standard position under the Working Time Regulations (WTR) she was entitled to 5.6 weeks leave per year. Ms Greenfield took seven days’ leave in July 2012 at which point she was working one day a week.
From August 2012 Ms Greenfield began working a pattern of 12 days on and two days off. In November 2012, she requested a week of paid leave. CB refused her request on the basis that she had exhausted her entitlement to paid annual leave in July 2012. The entitlement to paid leave was calculated at the date on which leave was given, based on the working pattern for the 12-week period prior to the leave. This meant that the leave she had taken at that time equated to seven weeks’ leave which exceeded her 5.6 weeks’ leave entitlement.
Ms Greenfield argued that national law, read in conjunction with EU law, requires that leave already accrued and taken should be retrospectively recalculated and adjusted following an increase in working hours; in effect, the new working hours should be used to calculate the leave entitlement that had already accrued, even if that leave had already been taken. The Tribunal made a reference to the CJEU.
The CJEU held that:
1. Holiday entitlement already accrued need not be recalculated retrospectively to take account of the increase in working hours.
2. Future holiday entitlement should be recalculated to reflect the changed working pattern.
3. Holiday leave taken in excess of the entitlement accrued under the previous working pattern should be deducted from the holiday going forward.
The CJEU also confirmed that these same steps apply in a situation where employment has terminated and the individual is seeking to be paid for accrued but untaken leave. In other words, if working hours have changed during the holiday year, different calculations may need to be performed for different periods whether this is during employment or after it has come to an end.
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The case of Lock v British Gas Trading Limited will be heard by the Employment Appeal Tribunal (“EAT”) on the 8th and 9th of December, hopefully bringing employers a step closer to certainty over the position regarding commission and holiday pay. The DWF employment team will be tweeting live from the two day appeal hearing. If you would like to keep up to date with events as they unfold please follow us on Twitter, our username is @DWF_Employment