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Leisure time

22nd December 2005
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Calculating holiday entitlement has become more complicated — now a long established method of paying holiday pay may be banned by the European Court of Justice. Adele Aspden reports.

Since 1998, when the Working Time Regulations came into force, workers have had a legal right to at least four weeks' paid time off in every full year they work. Although many employment laws only benefit those classed as 'employees', this particular right covers a broader section of the workforce.

The category of'workers' has a wide compass and includes many who, while not operating businesses of their own,might be treated as selfemployed for tax or other purposes.

The idea of giving workers four weeks' holiday is simple enough but as with most employment laws, putting it into practice has proved more complicated. What about those workers who start work part-way through a holiday year? What entitlement do part-timers have? Can leave be carried over to the next holiday leave year? What about payments in lieu of untaken holiday? Does statutory leave include public holidays? Do workers on sick leave accrue holidays'? Can holiday pay be rolled up into basic wages?

The answers to some of these questions can be found in the regulations: workers who start work part-way through a holiday year have their leave calculated on a pro-rata basis: parttime workers are still entitled to four weeks' leave, but a 'week' means the number of days the worker usually works in a week, so a threeday week gives 12 days' paid leave; untaken holidays cannot be carried over to the next leave year and payments in lieu can only be made when a worker's job finishes before the end of the holiday year.

Bank holidays

As far as bank and public holidays arc concerned, under the law at present, these days can be included within the four-week tally.

One subject courts and tribunals struggle with is whether workers can take paid holiday while on long-term unpaid sick leave. In a case decided earlier this year, the Court of Appeal said they cannot. While the ruling is a welcome development for employers, it only deals with workers who have not worked at all in the leave year for which they claim holiday.A more difficult question concerns employees who work for some of that leave year but spend much of i on sick leave. For the time being, the safest option for employers is to assume that holiday leave continues to accrue during sickness absence of less than a full leave year. The case is now going to the House of Lords, the highest court in the UK, which may well clarify the law. Another issue is the practice of rolling up holiday pay into a worker's hourly rate.The UK courts have been unable to agree whether rolled-up holiday pay is lawful and have asked the European Court of Justice to give a ruling on the point. Recent signals from Europe indicate, however, that the future of rolled-up holiday pay agreements may be in doubt. Adele Aspden is a practice support lawyer at Eversheds LIP CONTACTS Department of Trade and Industry www.dti.gov.uk


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