12 April 2010
The Employment Appeal Tribunal (EAT) has ruled that a worker's right to statutory paid annual leave, under the Working Time Regulations 1998 (WTR), is not inalienable as it can be subject to fairly operated statutory or contractual requirements to give notice to the employer.
Mr Lyons began working for Mitie Security Ltd. as a security officer in 1997. He worked at various sites as required and, over time, had raised a number of grievances with his employer over shortfalls in holiday pay, non-payment of expenses for cancelled shifts and because he was banned from certain sites. His contract of employment stated that all applications for holiday must be made using a standard company form and, wherever possible, this should be submitted at least four weeks prior to commencement of the holiday. Applications made at shorter notice would be considered on their merits and subject to staffing requirements. Leave could not be carried forward from one holiday year to another and any pay for holiday entitlement not taken in the relevant year would be forfeited.
On 6 March 2008, Mr Lyons faxed a letter to his employer requesting to take the nine days' paid leave still due to him before the end of the current leave year on 31 March. When his request was not granted, he raised a further grievance. Mitie Security responded that it had refused Mr Lyons' request to take outstanding holiday entitlement because he had not given the notice required under his contract and leave could not be carried forward. Mr Lyons resigned and brought a claim of unfair constructive dismissal and failure to pay outstanding holiday pay. The constructive dismissal claim was based on a series of events that he claimed cumulatively amounted to a repudiatory breach of his employment contract, with the failure to allow him to take the nine days' holiday as the 'final straw'.
The Employment Tribunal (ET) dismissed both claims and Mr Lyons appealed.
The EAT considered whether either statutory or contractual provisions as to notice can operate to prevent a worker from taking his or her full statutory leave. Mr Lyons argued that, since it is essentially a health and safety issue, an employer has a duty to ensure that holiday leave is taken. Mitie Security contended that the earlier judgment of the European Court in Stringer and others v HM Revenue and Customs demonstrated that the Court clearly envisaged a situation whereby the entitlement to paid annual leave might be lost in certain circumstances.
The EAT was satisfied that the right to statutory paid annual leave is not an inalienable right. It is subject to the notice provisions set out in the WTR or to contractually agreed provisions provided these are not operated by the employer in an 'unreasonable, arbitrary or capricious way' so as to deny any entitlement lawfully requested. An employer is not therefore legally obliged to make sure employees take all their annual holiday entitlement.
The appeal was allowed, however, because the EAT found that the ET had failed to analyse properly whether Mitie Security had considered the reason for Mr Lyons' late leave application on its merits and the company's staffing requirements, which it was necessary to do in order to determine whether the employer's handling of the request was in breach of the provisions in Mr Lyons' contract of employment. Furthermore, the ET had failed to deal properly with the issue of constructive dismissal. The case was therefore remitted to a different ET for rehearing.
James Townsend, senior associate, notes: "Whilst employers will be relieved that they do not have the additional responsibility of ensuring that workers do take their full annual leave entitlement, the EAT did comment on the absence of case law on this issue, so it is a decision which may well be challenged in future."
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