UKSC 21
On appeal from:  EWCA Civ 1402
Harpur Trust (Appellant)
Lord Hodge, Deputy President
JUDGMENT GIVEN ON
20 July 2022
Heard on 9 November 2021
Caspar Glyn QC
(Instructed by VWV Solicitors LLP (Bristol))
Mathew Gullick QC
(Instructed by Hopkins Solicitors LLP (Nottingham))
Michael Ford QC
Mathew Purchase QC
(Instructed by UNISON Legal Services (London))
lady rose and lady arden (with whom Lord Hodge, Lord Briggs and Lord Burrows agree):
1. Overview of the issue of law arising on this appeal
2. The facts and the proceedings below
“a part-time music teacher has a zero-hours contract entitling them to 5.6 weeks’ annual leave. They have a term-time contract meaning they work 32 weeks per year but remain in employment for the full year. They must take their 5.6 weeks of annual leave during the school holidays. They should therefore be paid for 5.6 weeks of leave taken at some point during the school holidays. The school breaks up for summer holidays on Friday 25 July and the teacher decides to take a two-week paid holiday in mid-August before school returns on 10 September. The employer should therefore take an average of the teacher’s pay rate over the last 52 weeks in which they worked, starting with the last week at the end of the summer term and omitting any other periods of school holiday in which the teacher was not paid.”
3. The legislative framework
“All workers should have adequate rest periods. The concept of ‘rest’ must be expressed in units of time, ie in days, hours and/or fractions thereof. Community workers must be granted minimum daily, weekly and annual periods of rest and adequate breaks. It is also necessary in this context to place a maximum limit on weekly working hours.”
“1. This Directive lays down minimum safety and health requirements for the organisation of working time.
2. This Directive applies to:
(a) minimum periods of … annual leave …”
“1. Member states shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.
2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.”
“This Directive shall not affect member states’ right to apply or introduce laws, regulations or administrative provisions more favourable to the protection of the safety and health of workers or to facilitate or permit the application of collective agreements or agreements concluded between the two sides of industry which are more favourable to the protection of the safety and health of workers.”
“(1) Subject to paragraph (5), a worker is entitled to four weeks’ annual leave in each leave year …
(5) Where the date on which a worker’s employment begins is later than the date on which (by virtue of a relevant agreement) his first leave year begins, the leave to which he is entitled in that leave year is a proportion of the period applicable under paragraph (1) equal to the proportion of that leave year remaining on the date on which his employment begins.”
“(1) Subject to … paragraphs (3) and (5), a worker is entitled in each leave year to a period of additional leave determined in accordance with paragraph (2).
(2) The period of additional leave to which a worker is entitled under paragraph (1) is –
(e) in any leave year beginning on or after 1 April 2009, 1.6 weeks.
(3) The aggregate entitlement provided for in paragraph (2) and regulation 13(1) is subject to a maximum of 28 days …
(5) Where the date on which a worker’s employment begins is later than the date on which (by virtue of a relevant agreement) his first leave year begins, the additional leave to which he is entitled in that leave year is a proportion of the period applicable under paragraph (2) equal to the proportion of that leave year remaining on the date on which his employment begins.”
“14. Compensation related to entitlement to leave
(1) This regulation applies where –
(a) a worker’s employment is terminated during the course of his leave year, and
(b) on the date on which the termination takes effect (‘the termination date’), the proportion he has taken of the leave to which he is entitled in the leave year under regulation 13 and regulation 13A differs from the proportion of the leave year which has expired.
(2) Where the proportion of leave taken by the worker is less than the proportion of the leave year which has expired, his employer shall make him a payment in lieu of leave in accordance with paragraph (3).
(3) The payment due under paragraph (2) shall be –
(a) such sum as may be provided for for the purposes of this regulation in a relevant agreement, or
(b) where there are no provisions of a relevant agreement which apply, a sum equal to the amount that would be due to the worker under regulation 16 in respect of a period of leave determined according to the formula –
(A × B) - C
A is the period of leave to which the worker is entitled under regulation 13 and regulation 13A;
B is the proportion of the worker’s leave year which expired before the termination date, and
C is the period of leave taken by the worker between the start of the leave year and the termination date …”
“15A. Leave during the first year of employment
(1) During the first year of his employment, the amount of leave a worker may take at any time in exercise of his entitlement under regulation 13 or regulation 13A is limited to the amount which is deemed to have accrued in his case at that time under paragraph (2) or (2A), as modified under paragraph (3) in a case where that paragraph applies, less the amount of leave (if any) that he has already taken during that year …
(2A) Except where paragraph (2) applies, for the purposes of paragraph (1), leave is deemed to accrue over the course of the worker’s first year of employment, at the rate of one-twelfth of the amount specified in regulation 13(1) and regulation 13A(2), subject to the limit contained in regulation 13A(3), on the first day of each month of that year.”
“16. Payment in respect of periods of leave
(1) A worker is entitled to be paid in respect of any period of annual leave to which he is entitled under regulation 13 and regulation 13A at the rate of a week’s pay in respect of each week’s leave.
(2) Sections 221 to 224 of the 1996 Act shall apply for the purpose of determining the amount of a week’s pay for the purposes of this regulation, subject to the modifications set out in paragraph (3).”
“224. Employments with no normal working hours
(1) This section applies where there are no normal working hours for the employee when employed under the contract of employment in force on the calculation date.
(2) The amount of a week’s pay is the amount of the employee’s average weekly remuneration in the period of twelve weeks ending –
(a) where the calculation date is the last day of a week, with that week, and
(b) otherwise, with the last complete week before the calculation date.
(3) In arriving at the average weekly remuneration no account shall be taken of a week in which no remuneration was payable by the employer to the employee and remuneration in earlier weeks shall be brought in so as to bring up to twelve the number of weeks of which account is taken.”
“(2) Where under this Chapter account is to be taken of remuneration or other payments for a period which does not coincide with the periods for which the remuneration or other payments are calculated, the remuneration or other payments shall be apportioned in such manner as may be just.”
4. The pro-rating of the annual leave requirement under EU law
“53. … in the first place, it must be borne in mind that, as is clear from the very wording of Article 7(1) of Directive 2003/88, every worker is entitled to paid annual leave of at least four weeks. That right to paid annual leave must be regarded as a particularly important principle of EU social law …
55. In addition, as the court has previously held, the right to paid annual leave cannot be interpreted restrictively (judgment of 30 June 2016, Sobczyszyn (C‑178/15) EU:C:2016:502, para 21 and the case law cited).
57. In the second place, it should be borne in mind that, according to the court’s settled case law, the right to paid annual leave, as laid down in article 7 of Directive 2003/88, has the dual purpose of enabling the worker both to rest from carrying out the work he or she is required to do under his or her contract of employment and to enjoy a period of relaxation and leisure (judgment of 20 July 2016, Maschek (C‑341/15) EU:C:2016:576, para 34 and the case law cited).
“58. That purpose, which distinguishes paid annual leave from other types of leave having different purposes, is based on the premiss that the worker actually worked during the reference period. The objective of allowing the worker to rest presupposes that the worker has been engaged in activities which justify, for the protection of his or her safety and health, as provided for in Directive 2003/88, his or her being given a period of rest, relaxation and leisure. Accordingly, entitlement to paid annual leave must, in principle, be determined by reference to the periods of actual work completed under the employment contract (judgment of 4 October 2018, Dicu (C‑12/17) EU:C:2018:799, para 28 and the case law cited).”
“59. Nonetheless, in certain specific situations in which the worker is incapable of carrying out his or her duties, the right to paid annual leave cannot be made subject by a member state to a condition that the worker has actually worked (see, to that effect, judgment of 24 January 2012, Dominguez (C‑282/10) EU:C:2012:33, para 20 and the case law cited).
60. The same applies, in particular, with regard to workers who are absent from work on sick leave during the reference period. As is clear from the court’s case law, with regard to entitlement to paid annual leave, workers who are absent from work on sick leave during the reference period are to be treated in the same way as those who have in fact worked during that period (judgment of 4 October 2018, Dicu (C‑12/17) EU:C:2018:799, para 29 and the case law cited).
61. Thus, according to article 7 of Directive 2003/88, any worker on sick leave during the reference period cannot have his or her entitlement to at least four weeks’ paid annual leave affected (see, to that effect, judgment of 24 January 2012, Dominguez (C-282/10) EU:C:2012:33, para 30).
62. In that context, the court has held that article 7(1) of Directive 2003/88 must be interpreted as precluding national legislation or practices under which the right to paid annual leave is extinguished at the end of the leave year and/or of a carry-over period laid down by national law where the worker has been on sick leave, for the whole or part of the leave year, and therefore has not actually had the opportunity to exercise that right (judgment of 30 June 2016, Sobczyszyn (C‑178/15) EU:C:2016:502, para 24 and the case law cited).
63. Under the case law set out above it cannot be accepted that a worker’s right to a minimum paid annual leave, guaranteed by European Union law, may be reduced where the worker could not fulfil his or her obligation to work during the reference period due to an illness (judgment of 19 September 2013, Review Commission v Strack (C‑579/12 RX‑II) EU:C:2013:570, para 34 and the case law cited).
64. Thus, Directive 2003/88 does not allow member states either to exclude the existence of the right to paid annual leave or to provide for the right to paid annual leave of a worker, who was prevented from exercising that right, to be lost at the end of the reference period and/or of a carry-over period fixed by national law (judgment of 29 November 2017, King (C‑214/16) EU:C:2017:914, para 51 and the case law cited).
65. It must therefore be ascertained whether the principles deriving from the case law on the right to paid annual leave of a worker who, because of sickness, has been unable to exercise his or her right to such leave during the reference period and/or the carry-over period fixed by national law may be transposed, mutatis mutandis, to a situation, such as that at issue in the main proceedings in the present cases, in which a worker who has been unlawfully dismissed then reinstated in his or her employment, in accordance with national law, following the annulment of his or her dismissal by a decision of a court, has not, during the period between the date of the unlawful dismissal and the date of reinstatement, actually carried out work for his or her employer.
66. In that regard, it should be observed that, in order to derogate, as regards workers absent from work owing to sickness, from the principle that the rights to annual leave must be determined by reference to periods of actual work, the court has relied on the fact that incapacity for work owing to sickness is, as a rule, not foreseeable and beyond the worker’s control (see in particular, to that effect, judgment of 4 October 2018, Dicu (C‑12/17) EU:C:2018:799, para 32 and the case law cited).
67. It must be stated that, like incapacity for work owing to sickness, the fact that a worker was deprived of the opportunity to work owing to dismissal that was subsequently held to be unlawful is, as a rule, not foreseeable and beyond the worker’s control.
68. As the Advocate General observed in point 48 of his Opinion, the fact that the worker concerned has not, during the period between the date of his or her unlawful dismissal and the date of her reinstatement, in accordance with national law, following the annulment of that dismissal by a decision of a court, actually carried out work for his or her employer is the consequence of the latter’s actions that led to the unlawful dismissal, without which the worker would have been in a position to work during that period and to exercise his or her right to annual leave.
69. Therefore, in a situation such as that at issue in the main proceedings in the present cases, the period between the date of the unlawful dismissal and the date of the worker’s reinstatement, in accordance with national law, following the annulment of that dismissal by a decision of a court, must be treated as a period of actual work for the purpose of determining the rights to paid annual leave.
70. Accordingly, the court’s case law relating to the right to paid annual leave of a worker who, owing to sickness, has not been in a position to exercise his or her right to such leave during the reference period and/or the carry-over period fixed by national law may be transposed, mutatis mutandis, to a situation, such as that at issue in the main proceedings in each of the present cases, in which a worker who has been unlawfully dismissed and subsequently reinstated, in accordance with national law, following the annulment of the dismissal by a decision of a court, has not, during the period between the date of that dismissal and the date of his or her reinstatement, actually carried out work for his or her employer.”
“1. In respect of employment conditions, part-time workers shall not be treated in a less favourable manner than comparable full-time workers solely because they work part time unless different treatment is justified on objective grounds.
2. Where appropriate, the principle of pro rata temporis shall apply.”
5. The Harpur Trust’s submissions as to how to apply the WTR
(a) The Harpur Trust’s alternative methods
(b) The effect of the alternative methods on part-year workers
(c) The problems with the proposed alternative methods
(d) Other criticisms
(i) Although the CJEU’s case law suggests that in general, the minimum entitlements prescribed by the WTD are calculated by reference to work actually carried out by the worker (subject to exceptions explained in, for example, QH and Dicu), the WTD does not prevent a more generous provision being made by domestic law.
(ii) Even if, therefore, the proper construction of the WTR results in Mrs Brazel being entitled to a greater amount of leave than she might be strictly entitled to under the WTD and to a proportionately greater leave requirement than full-time workers, such a construction is compliant with the WTD.
(iii) The incorporation into the WTR of the means of calculating an average week’s pay set out in section 224 of the 1996 Act for workers, including those who work very irregular hours, was a policy choice made by Parliament according to which the number of hours worked affects the amount of a week’s pay in some circumstances but not in others.
(iv) There is nothing in the WTR which indicates that the regulations should be construed so as to permit the alternative methods of calculating pay that have been adopted or proposed by the Harpur Trust and aspects of their proposed methods are directly contrary to what is required by the statutory wording and the WTR.