The Acas National Newsletter for June, out earlier this week, contains some slightly updated advice on the eternal question of how you calculate holiday pay, plus an existential poser on the relationship between sickness and holiday accrual.
- On the holiday pay front, there remains no steer as to how commission or overtime earnings should be factored into your calculations, only the repeated assertion that they should be. The advice notes that Lock is now to be sent back to the Employment Tribunal “to decide how such holiday pay calculations must be made“. This is not correct – the finding of the Employment Tribunal will relate only to the facts in Lock. While they may be persuasive in other cases, they will be of no greater precedent value than that, especially where commission earnings are much lumpier or less regular than Mr Lock’s.
- The guidance does not mention the recent reiteration of the effectiveness of a three month gap to break a “series of deductions” for claims of holiday pay arrears via the unlawful deductions provisions of the Employment Rights Act.
- “There is currently no definitive case law that suggests voluntary overtime needs to be taken into account”, it says, but also “several Employment Tribunal rulings have judged (sic) that voluntary overtime should be included when undertaken regularly”. “Regularly” is undefined but obviously brings with it a whole series of subsidiary questions. What happens if the overtime is regular, but not on the days you took as leave? Over how long must you work an overtime pattern before it becomes regular? What degree of variance of hours or days stops voluntary overtime being regular for these purposes? Acas refers to an EAT decision expected later this year which may answer some or none of these questions, but it is wildly unlikely to deal with all of them.
- Then there is the sickness question. The accepted wisdom is that (per the Acas note) “when a worker takes paid or unpaid sick leave their annual leave will continue to accrue. If a worker is unable to take their annual leave in their current leave year because of sickness, they should be allowed to carry that leave over”. Separately the guide says that “while workers are in employment, 5.6 weeks of their annual leave…… must be taken and cannot be “paid off.”
The Working Time Directive minimum holiday requirement is a health and safety measure designed to ensure that workers have an opportunity to recover from the strains of work. It is far less clear that they need those holidays to recover from the strains of not being at work, or in either case that there is any actual health and safety benefit in carrying accrued holidays forward to what could be many months after the period of work notionally being recovered from. Nonetheless, that is the law.
However, the same Acas guidance indicates nonetheless that the employee “may choose to specify a period where they are sick but still wish to be paid annual leave”. Really?
So does your being off sick mean that you can take holiday or not? The WTR are very clear that you cannot pay out statutory minimum holidays other than on termination of employment, sick or not. They have to be taken or carried forward. But if they can be taken when sick, as the Acas note suggests, when is an employee actually unable to take holiday due to sickness? In other words, why is there ever any need for it to be carried forward?
Is there a level of sickness which is compatible with being on leave and something more serious which isn’t? Bear in mind here that there is nothing in the Working Time Regulations which says that your holiday has to be away from home, physically beneficial or even particularly enjoyable, so that threshold of incapacity would surely be a high one.
And if it is possible to take holidays while off sick, what stops the employer using the WTR to compel you to take holidays during the paid period of your sick leave and so save itself sick pay and/or holiday accrual? Other than its being employment relations suicide, I suppose.
The practical answer is probably that an employee can agree to “take” WTR holiday and be paid for it, even while off sick, and probably won’t then take any points in relation to the technical breach of the WTR which that entails. However, he cannot be compelled to do so. That distinction is not a satisfactory legal position for employers which face the accrual of substantial holiday pay liabilities merely because the absent employee does not agree to take it. If it is possible conceptually to take holiday while off sick then there would be no cases where employees are “unable” to take it on those grounds in the current leave year, and so those liabilities should not arise.