Case update (1): Holiday pay – calculating the effect of change

Summary: When a worker increases their hours, does any statutory annual leave that has already accrued need to be recalculated retrospectively to take account of the increased working hours?

No says the ECJ in Greenfield v The Care Bureau Ltd available here.

Facts: Ms Greenfield was employed by The Care Bureau Ltd from 15 June 2009.

Her contract provided that working hours and days differed from week to week and her weekly pay varied accordingly.  Ms Greenfield was entitled to 5.6 weeks of leave per year.

Ms Greenfield left The Care Bureau Ltd on 28 May 2013. She took 7 days of paid leave during the final leave year in July 2012. During the 12-week period immediately preceding that holiday, her work pattern was 1 day per week. However, from August 2012 Ms Greenfield began working a pattern of 12 days on and 2 days off taken as alternate weekends.

In November 2012 Ms Greenfield requested a week of paid leave. The Care Bureau Ltd informed her that, as a result of the holiday taken in July 2012, she had exhausted her entitlement to paid annual leave. The entitlement to paid leave was calculated at the date on which leave was taken, based on the working pattern for the 12-week period prior to the leave. Since Ms Greenfield had taken her leave at a time when her work pattern was one day per week, she had taken the equivalent of 7 weeks of paid leave, and accordingly exhausted her entitlement to paid annual leave.

Ms Greenfield brought a Tribunal claim arguing that UK law, read in conjunction with EU law, requires that leave already accrued and taken should be recalculated retrospectively and adjusted following an increase in working hours. For example, following a move from part-time to full-time work, there should be a recalculation so as to be proportional to the new number of working hours. The Tribunal made a reference to the CJEU (formerly the ECJ).

The CJEU held that there is no requirement to adjust leave already accrued or taken. Annual leave must be calculated in accordance with a worker’s contractual pattern and the hours and days actually worked.  The new calculation is only for the new working pattern. The taking of annual leave accumulated in one period has no connection to the working hours in the later period when leave is actually taken.

Overall, it is important to distinguish between periods during which the worker worked according to different work patterns. The number of units of annual leave accumulated in relation to the number of units worked should be calculated for each period separately. For example in this case, the units of paid annual leave already taken during the period of part-time work which exceeded the right to paid annual leave accumulated during that period, must be deducted from units accrued during the period of work in which Ms Greenfield increased her number of hours worked.

The calculation of paid annual leave entitlement is not affected by whether employment has ended or if it is continuing. This means that if working hours have changed during the holiday year, on termination of employment different calculations may need to be performed for different periods.

Implications: Good news for employers that paid leave entitlement already taken does not need to be recalculated on a change of working pattern. In summary, the number of units of annual leave accumulated in relation to the number of units worked should be individually calculated for each period of differing working pattern. However, it is a shame that the decision did not go on to provide assistance on how that paid holiday should be calculated, other than it is for the national court to determine, using an appropriate reference period.