United Kingdom Employment Appeal Tribunal

APPEARANCES

 

 

EAT/481/00 For the Appellants	MR J BOWERS (One of Her Majesty's Counsel) Instructed by: Engineering Employer's Federation Broadway House Tothill Street London SW1H 9NQ
For the Respondent	MR B CARR (of Counsel) Instructed by: Messrs Rowley Ashworth Solicitors 247 The Broadway Wimbledon London SW19 1SE
EAT/1030/00 Appellants	No appearance or representation by or on behalf of the Appellants
Respondent	Mr N Huntington Representative Peninsula Business Services Ltd Riverside New Bailey Street Manchester M3 5PB
EAT/758/01 Appellant	MR B CARR (of Counsel) Instructed by: Messrs Rowley Ashworth Solicitors Kennedy Tower St Chad's Queensway Birmingham B4 6JG
Respondent	No appearance or representation by or on behalf of the Respondent


 


MR JUSTICE LINDSAY (PRESIDENT)

1. We have before us three separate appeals - one by an employee and two by the employers - that arise out of claims for so-called holiday pay, all involving claims by persons who had been on long-term leave of absence on medical grounds. We deal with the question of whether an employee who is absent from work long-term on sick leave can claim for holiday pay attributable to a period of employment throughout which he was so absent?
2. We have had extensive argument (on an employer's side, as we shall give more detail of below, from Mr Bowers Q.C., on the employees' side from Mr Carr and Mr Huntington) on the effect of the relevant legislation, namely the Working Time Regulations 1998. In some respects those regulations have been amended with effect from the 25th October 2001 by The Working Time (Amendment) Regulations 2001 but the amendments are not relevant to any of the cases before us.
3. The entitlement to annual leave was at the material time regulated by Regulation 13 of the 1998 Regulations. It provided:-

"(1) Subject to paragraphs (5) and (7), a worker is entitled in each leave year to a period of leave determined in accordance with paragraph (2).

(2) The period of leave to which a worker is entitled under paragraph (1) is -


(a) In any leave year beginning on or before 23rd November 1998, three weeks;
(b) In any leave year beginning after 23rd November 1998 but before 23rd November 1999, three weeks and a proportion of a fourth week equivalent to the proportion of the year beginning on the 23rd November 1998 which has elapsed at the start of that leave year; and
(c) In any leave year beginning after the 23rd November 1999, four weeks.

(3) A worker's leave year for the purposes of this Regulation, begins -

(a) On such date during the calendar year as may be provided for in a relevant agreement; or
(b) Where there are no provisions of a relevant agreement which apply -
(i) If the worker's employment began on or before 1st October 1998, on that date and each subsequent anniversary of that date; or
(ii) If the worker's employment begins after the 1st October 1998, on the date on which that employment begins and each subsequent anniversary of that date.

(4) ...........

(5) ...........

(6) Where by virtue of paragraph (2) (b) ..... the period of leave to which a worker is entitled is or includes a proportion of a week, the proportion will be determined in days and any fraction of a week, the proportion shall be determined in days and any fraction of day shall be treated as a whole day.

(7) ...........

(8) ...........

(9) Leave to which a worker is entitled under this Regulation may be taken in instalments, but

(a) It may only be taken in the leave year in respect of which it is due, and
(b) It may not be replaced by a payment in lieu except where the workers' employment is terminated."

4. Thus there emerges the simple provision that an entitlement to annual leave arises if a claimant is or has been a "worker" during the whole or part of a leave year. Nothing further appears there to be required and the nature of the "leave year" and the length of annual leave to which a worker may be entitled are there specified.
5. The term "worker" is defined in Regulation 2 (1). It provides that:-

"2. (1) "Worker" means an individual who has entered into or works under (or, where the employment has ceased, worked under) -

(a) A contract of employment; or
(b) Any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaken carried on by the individual; and any reference to a worker's contract should be construed accordingly."

That does not appear to import any requirement that in order to be a "worker" some work needs to have been done or that some attendance to do work should have occurred, either within any particular period or at all.

"Working time" is defined as follows:-

""Working time", in relation to a worker, means -

(a) Any period during which he is working, at his employer's disposal and carrying out his activities or duties,

(b) Any period during which he is receiving relevant training, and

(c) Any additional period which is to be treated as working time for the purpose of these regulations under a relevant agreement;

and "work" shall be construed accordingly;"

It is notable that Regulation 13, describing who is to become entitled to leave each leave year and how long that leave shall be makes no reference to any "working time" as having been needed to have been served.

6. It is notable, too, that Regulation 13 includes nothing equivalent to the words "during which he works for his employer" which are found in Regulations 10 and 11 as describing the periods over which "Daily rests" and "Weekly rest periods" accrue to an employee. Regulation 12 as to "rest breaks", by its reference to "working time" similarly imports a need for the worker to have worked if the break is to be earned. Plainly the legislature found it easy enough expressly to import the doing of work as a pre-condition of the accrual of the particular right being dealt with when it wished to do so, which makes the absence of any corresponding provision in Regulation 13 so striking.
7. It will be relevant to look also at the definition in the regulations of the expression "rest-period", which is as follows:-

""Rest-period" in relation to a worker, means a period which is not working time, other than a rest, break or leave to which the worker is entitled under these regulations;"

It would follow from that definition that a worker who is properly on leave of absence from work by reason of sickness is enjoying a rest-period and, moreover, is enjoying something (usually by express or implied contractual provision) to which he is entitled other than under the 1998 Regulations.

8. In the prescribed manner which we have set out the entitlement to annual leave arises but there are restrictions on how that right can be exercised. It will have been seen from the important provision at Regulation 13 (9) supra that there is no right to any money loosely describable as holiday pay where the entitlement to annual leave is not in fact exercised. It is to be noted also that if the right to annual leave is not exercised within the appropriate leave year then the right to that leave expires.
9. Special provision is made for the case where a man leaves employment during a leave year without by then having exercised in full the entitlement to leave to which, treating the entitlement as accruing in proportion to the part of the leave year served, he would then be entitled. That is provided for on a rateable basis in Regulation 14 which we will need to turn to in more detail later. It is an exception to the general case that one cannot have money instead of leave, but it applies only where the employment has ceased.
10. Regulation 15 then regulates dates on which the leave to which a person is or will be entitled may be taken or, put another way, it regulates the manner in which the entitlement to annual leave may be exercised. Regulation 15 provides, so far as material, as follows:-

"15. Dates on which leave is taken

(1) A worker may take leave to which he is entitled under regulation 13 (1) on such days as he may elect by giving notice to his employer in accordance with paragraph (3), subject to any requirement imposed on him by his employer under paragraph (2).

(2) A worker's employer may require the worker -

(a) to take leave to which the worker is entitled under regulation 13 (1); or
(b) not to take such leave, on particular days, by giving notice to the worker in accordance with paragraph (3).

(3) A notice under paragraph (1) or (2) -

(a) may relate to all or part of the leave to which a worker is entitled in a leave year;
(b) shall specify the days on which leave is or (as the case may be) is not to be taken and, where the leave on a particular day is to be in respect of only part of the day, its duration; and
(c) shall be given to the employer or, as the case may be, the worker before the relevant date.

(4) The relevant date, for the purposes of paragraph (3), is the date -

(a) in the case of a notice under paragraph (1) or (2) (a), twice as many days in advance of the earliest day specified in the notice as the number of days or part-days to which the notice relates, and
(b) in the case of a notice under paragraph (2) (b), as many days in advance of the earliest day so specified as the number of days or part-days to which the notice relates.

(5) Any right or obligation under paragraphs (1) to (4) may be varied or excluded by a relevant agreement."

Whilst, no doubt, many employers and employees manage their holiday plans with less formality than the Regulations require, where, as in the cases before us, it is the strict regulations that are relied upon, the Regulations need duly to be complied with. Thus a worker, if he wishes to exercise his accrued or accruing right to annual leave under the Regulations, has to give his employer notice specifying the days on which the leave is to be taken and has to give that notice in good time before the leave is required to begin, as specified in Regulation 15 (4) (a).

11. Mr Bowers argues that annual leave is and is only leave to be absent from what would otherwise have been working time. That will, no doubt, generally be the case but there is no express provision in the Regulations to such effect nor any necessity to imply one. Indeed, such a provision would sometimes operate unfairly; a man to whom his employer was obliged to offer work might be laid off temporarily and hence then might not be (within the definition of "working time") "working, at his employer's disposal and carrying out his activities or duties". If Mr Bowers were right that employee could not take some or all of the laid-off period as his annual leave. We see no provisions to lead to any such restriction in the choices open to both employer and employee.
12. Then at Regulation 16 there is introduced a right for the worker to be paid for the leave to which he is entitled or will be entitled and which he has taken. Regulation 16 so far as relevant provides:-

"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, at the rate of a week's pay in respect of each week of 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).

(3) The provisions referred to in paragraph (2) shall apply -

(a) as if references to the employee were references to the worker;
(b) as if references to the employee's contract of employment were references to the worker's contract;
(c) as if the calculation date were the first day of the period of leave in question; and
(d) as if the references to sections 227 and 228 did not apply.

(4) A right to payment under paragraph (1) does not affect any right of a worker to remuneration under his contract ("contractual remuneration").

(5) Any contractual remuneration paid to a worker in respect of a period of leave goes towards discharging any liability of the employer to make payments under this regulation in respect of that period; and, conversely, any payment of remuneration under this regulation in respect of a period goes towards discharging any liability of the employer to pay contractual remuneration in respect of that period."

If payment were to be made in respect of leave not in fact taken that would conflict with Regulation 13 (9) (b) and, equally, nothing in Regulation 16 overrides the formal requirements for notice in Regulation 15. Thus in order to achieve consistency and clarity where the employment continues the words "in respect of each week of leave" in Regulation 16 (1) need to have added a phrase so that the provision should read "in respect of each week of leave duly taken".

13. The weekly sums thus payable are prescribed, as we have seen, by reference to sections 221-224 of the Employment Rights Act 1996. Those provisions may in some cases throw up further difficulties, especially where the employees' remuneration varies - for example, by reference to commissions - according to the amount of work done in a period, but quantification of particular sums has not been identified as a problem in the cases before us and so we shall not explore the possibilities or anomalies that could arise by way of the reference to sections 221-224.
14. Next in the Regulations comes Regulation 17, the exact import of which has been the subject of some argument. It is headed "Entitlement under other provisions". It provides:-

"Where during any period a worker is entitled to a rest period, rest break or annual leave both under a provision of these Regulations and under a separate provision (including a provision of his contract), he may not exercise the two rights separately, but may, in taking a rest period, break or leave during that period, take advantage of whichever right is, in any particular respect, the more favourable."

15. Grammatically the provision is perhaps ambiguous; there are two references to three types of leave of absence, namely rest periods, rest breaks and annual leave. In each case two of those three types are mentioned, then there is an "or" before the third. It can thus arguably be read as meaning that where there is an entitlement to any one of the three, then any right other than under the Regulations to any of the three may not be exercised separately but that the employee can choose whichever of the entitlements is the more favourable. We shall call that the first construction. However, a better, second, construction is a distributive one, such that where there is a dual entitlement to any one of the three (for example, annual leave) then it is only the right to the one of the corresponding type (for example, annual leave) that may not be separately exercised, but, again, with the employee being given a choice.
16. A person who is properly on leave of absence from work on sickness grounds may be said to be "entitled to a rest period" within the definition we have cited, that being an entitlement (normally contractual, by express or implied term) not conferred by the 1998 Regulations. So long as his absence is explained by sickness grounds he may be said to be exercising his extraneous right to that rest period. At the same time, by reason only of being a "worker" throughout all or part of a leave year he may have become entitled to another type of leave of absence, annual leave, under Regulation 13. If the first construction is right he cannot enjoy both rights separately but may under Regulation 17 choose whichever is more favourable.
17. If it is the second construction that is right then Regulation 17 does not apply as the first right is to one type of leave (to a rest period, on sickness grounds) but the second right is not to a corresponding but to a different type (annual leave). But even there, as Mr Carr argues, the legislature, whilst fully alive to the possibility that there may be different entitlements to leave of absence, some within the Regulations and some without, did not provide, for example, that the one should pro tanto diminish or annihilate the other or that only where Regulation 17 applies (in its second construction) should the choice which it describes be available. It would have been easy enough to forbid the choice where Regulation 17 does not apply yet that was not done expressly and there is no good reason to import an implied prohibition.
18. Accordingly, whichever is right of the first or second construction of Regulation 17, we see it as open to a man in, say, May of a given year to say to his employer that "Although it is already clear on medical grounds that I will in July still be duly entitled to sick leave, I now give due notice that as from the 1st to the 15th July I am instead to be regarded as taking annual leave and I give notice under Regulation 15 in that behalf.".
19. Last of the Regulations to which we need to refer is Regulation 30, it provides:-

"30. Remedies

(1) A worker may present a complaint to an employment tribunal that his employer -

(a) has refused to permit him to exercise any right he has under -
(i) regulation 10 (1) or (2), 11 (1), (2) or (3), 12 (1) or (4) or 13 (1);
(ii) regulation 24, in so far as it applies where regulation 10 (1), 11 (1) or 2) or 12 (1) is modified or excluded; or
(iii) regulation 25 (3) or 27 (2); or
(b) has failed to pay him the whole or any part of any amount due to him under regulation 14 (2) or 16 (1).

(2) An employment tribunal shall not consider a complaint under this regulation unless it is presented -

(a) before the end of the period of three months (or, in a case to which regulation 38 (2) applies, six months) beginning with the date on which it is alleged that the exercise of the right should have been permitted (or in the case of a rest period or leave extending over more than one day, the date on which it should have been permitted to begin) or, as the case may be, the payment should have been made;
(b) within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of three or, as the case may be, six months.

(3) Where an employment tribunal finds a complaint under paragraph (1) (a) well-founded, the tribunal -
(a) shall make a declaration to that effect, and
(b) may make an award of compensation to be paid by the employer to the worker.

(4) The amount of the compensation shall be such as the tribunal considers just and equitable in all the circumstances having regard to -

(a) the employer's default in refusing to permit the worker to exercise his right, and
(b) any loss sustained by the worker which is attributable to the matters
complained of.

(5) Where on a complaint under paragraph (1) (b) an employment tribunal finds that an employer has failed to pay a worker in accordance with regulation 14 (2) or 16 (1), it shall order the employer to pay to the worker the amount which it finds to be due to him."

It is difficult to see how the exercise of an entitlement to annual leave under Regulation 13 (1) can be said to have been refused within Regulation 30 if notice under Regulation 15 has not been duly given, at all events unless some clear and comprehensive pre-emptive indication of a refusal by the employer to permit the leave has been given.

20. Mr Bowers cited Gibson -v- East Riding of Yorkshire Council [2000] IRLR 598 and United Kingdom -v- Council of the European Union [1997] ICR 443 ECJ to us. We do not find either to throw any real light on the construction of the parts of the Regulations with which we are concerned.
21. Mr Carr draws attention to anomalies that would arise were Mr Bowers' argument at paragraph 11 above to succeed. Suppose a man had worked under a contract of employment for 46 weeks of his leave year but that he then falls ill and continues to be off sick for some weeks whilst remaining employed. On Kigass' argument he would be unable to specify any of those weeks to be taken as annual leave under Regulation 15 as he would be already absent from work for a different reason, namely illness. Indeed, if his sickness absence were to continue until the 52nd week of the leave year he would, on Kigass' argument, be unable, by reason of Regulation 13 (9) (a), to take (and thus to require payment for) any of the leave to which his 46 weeks of work and his 52 weeks of employment had entitled him. So far from being able to choose the more favourable option (either under Regulation 17 or as is not prohibited by Regulation 17) the employee, on going sick, could be altogether denied payment for annual leave. Mr Bowers points to other anomalies going the other way, such as that an employee on a so-called "Zero-hours" contract of employment who had not in fact been called on to work at all in a leave year would nonetheless (on giving due notice) become entitled to paid annual leave and might be so entitled even though he had worked during that year for another employer. As to that two things need to be said; first of all, we understood Mr Bowers to concede that entitlement to annual leave flowed from being a "worker", without more, so that, however anomalous the position might be in "Zero-hours" cases, the entitlement was conceded. Secondly, the questions of construction before us cannot ultimately be decided by reference to a balance of comparative anomalies but to the language used in the Regulations.
22. Mr Huntington, resisting Mr Bowers' argument that it cannot conduce to the health and safety of employees that those already absent sick should be able to take annual leave, points out that the Directive 93/104/C, which the Regulations are intended to implement, is not necessarily limited to matters of health and safety. The preamble to the Directive incorporates reference to the Community Charter of the Fundamental Social Rights of Workers of 9^th December 1989 which spoke (with our emphasis) of "living and working conditions of workers". The preamble also indicates that the Directive was a practical contribution "towards creating the social dimension of the internal market" - see also R. -v- Secretary of State for Trade and Industry ex parte BECTU [2001] IRLR 559 ECJ at p. 568 paragraph 37. One cannot therefore decline to adopt a construction of the Regulations simply on the ground it would not enhance the health and safety of workers (even were that proved) because an effect (not deleterious to health and safety) may have been intended on social grounds.
23. With that background deriving from the Working Time Regulations we turn to the individual cases.

K. Brown -v- Kigass Aero Components Ltd.

24. In this appeal the Appellant employer, Kigass, appears by Mr Bowers Q.C. and the Respondent, Mr Brown, the employee, by Mr Carr.
25. On the 13th January 1997 Mr Brown had a road traffic accident. His contract of employment with Kigass remained in being but he was unable to return to work for a while. He was away from work for long spells in 1997. On the 27th December 1997 Mr Brown's period of contractual sick pay from Kigass expired (save, perhaps, for some 5 days paid absence per annum thereafter). In 1998 also he was away for long spells. Indeed, he has not worked for Kigass since the 31st October 1998. On the 31st January 1999 his entitlement to statutory sick pay expired. On the 17th August 1999 Mr Brown presented an IT1 for "unauthorised deduction from wages and breach of the Working Time Directive". His IT1 said:-

"I am off work long-term sick. I am entitled as an employee to holiday pay. My employer accepts this and has limited that pay to five days although I believe I am entitled to three weeks under the European Law encompassed in the Working Time Directive from October 1998. As an employee with a contract of employment I come under the definition of worker. Holiday pay at Kigass is paid as basic earnings whether at work or not. Although the company have agreed that I am due to holiday pay they have refused to make the payment due to myself."

On the 14th September 1999 an IT3 was received from Kigass which said:-

"The Respondents are Federated Conforming Members of the Engineering Employers Federation and as such employees have the various National Agreements incorporated into their contracts of employment.

One such agreement concerns holiday pay entitlements for employees who are on long term sick leave. When an individual has been away for more than 39 weeks holiday entitlement amounts to five days and it is submitted that this is the entitlement of the applicant.

With regard to the claim under the Working Time Regulations it is submitted that individuals do not have an entitlement to annual leave when they are absent from the work place for any other reason.

In the alternative if it is determined that he is entitled to fifteen days leave then it is submitted that the five days detailed above form part of the extended entitlement."

26. On the 27th January 2000 there was a hearing at Birmingham and on the 20th March the decision of the Tribunal, under the Chairmanship of Mr A.J. McCarry, was sent to the parties. It was:-

"The unanimous decision of the Tribunal is that this application succeeds. The parties having reached agreement as to the sum payable by the Respondents to the Applicant, leave is granted to apply to the Tribunal concerning terms of implementation during the period of limited for an appeal. [sic] Subject thereto, the claim will thereafter be treated as dismissed on withdrawal by the Applicant."

27. On the 18th April 2000 Kigass lodged its Notice of Appeal.
28. Although the Tribunal did not in terms find that there had been a "relevant agreement" in Mr Brown's case for the purposes of Regulation 13 (a) supra the Tribunal approached the matter, without dispute from either side, on the basis that Mr Brown's leave year began on the 1st January 1999 and that, if any sum was due, what was due was £966.36 gross. The Tribunal did not explore, so far as one can tell from its decision, the detail of whatever notice was given to the employer under Regulation 15 but it did hold that Mr Brown had complied with the requirement to give notice. Mr Bowers tells us on instructions that the relevant notice under Regulation 15 (1) was given on the 17th August 1999, the very day on which Mr Brown lodged his IT1. That information did cause us some concern as it is difficult to see how there could have been or was likely to have been a refusal falling within Regulation 30 (1) (a) by the time the IT1 was presented and hence that a jurisdictional difficulty might have arisen under the terms of the opening words of Regulation 30 (1). However, Mr Bowers expressly disavowed the taking of any point as to jurisdiction and the parties have been keen to obtain guidance in principle and, given that there is no express finding that there was no refusal or failure to pay falling within Regulation 30 (1), we have proceeded upon the basis that we cannot assume that the Tribunal had no jurisdiction.
29. Mr Bowers concedes that whilst an employee is off sick his entitlement to annual leave continues to accrue but he goes on to say that an employer cannot be said to refuse the taking of that annual leave so long as the employee is already absent from working on other grounds, such as sickness. However, it is not a refusal by the employer to grant annual leave which triggers the payment under Regulation 16 but the combination of the right to leave having accrued (as Mr Bowers concedes) and of its then being duly sought to be taken under Regulation 15. An employer may give a notice under Regulation 15 (2) conforming with Regulation 15 (3) and (4) but there is no suggestion that was done in the Kigass case and in any event the employer's notice under Regulation 15 plainly cannot be used totally to refuse the taking of accrued annual leave either directly or, by seeking to postpone it outside the relevant leave year, by causing it to expire under Regulation 13 (9) (a).
30. Given our approach to the constructions of regulations in the light of the argument we received, we see no error of law in the Tribunal's decision. Mr Brown had fulfilled the only requirements which he needed to in order to be paid for annual leave taken; he was, as regards Kigass, a worker throughout the leave year and had duly given notice under Regulation 15 which had not been countermanded under the Regulations. He thus was entitled to leave and took it and thus is to be paid for it. His absence from the workplace and his failure to put in any working time is no bar to his claim. Accordingly in the Kigass case, the appeal is dismissed.

David Taree -v- Bold Transmission Parts Ltd.

31. In this appeal the employer, Bold Transmission, has not been represented before us but Mr Taree has been represented by Mr Huntington.
32. On the 30th March 2000 Mr Taree presented an IT1 for "unlawful deduction; Working Time Regulations". He said that he had had an accident at work. He had been on long-term sick leave for over 12 months. He remained, however, an employee. He said that in late 1999 he had requested payment for annual leave. He said that Bold Transmission had a system under which the calendar year was the leave year, with 26 days leave being granted per leave year. He added that the leave days were required to be taken within the appropriate leave year.
33. On the 14th April 2000 Bold Transmission lodged its IT3. Bold said:-

"Mr D. Taree claimed to have suffered an industrial injury at 8.15 a.m. on the 5th August 1997 but declined any assistance or offer of being taken to hospital and carried on working; later that day he asked permission to go home, which was agreed. The following week we received a sick note for abdominal muscle strain dated the 14th August 1997, followed by subsequent sick notes until the 19th December 1997 together with a letter dated 22nd December 1997 telling us he would keep us informed. We heard nothing from him for almost 2 years and assumed he had decided not to return to work thus terminating his employment with us; however, towards the end of 1999 he contacted us requesting holiday pay although he had not been in attendance since August 1997. We replied that we considered his claim for holiday pay to be invalid due to his non-attendance in accordance with our contractual terms and regulation 13 (9) of the Working Time Regulations 1998 but should he feel fit enough to return to work his job would still be available. Accordingly we would ask the Tribunal to declare whether by his prolonged absence and non-communication he effectively terminated his employment with us, if not is he entitled to such holiday pay?"

34. On the 26th June 2000 there was a hearing at the Employment Tribunal before a panel of only two. On the 20th July 2000 the decision of the Tribunal under the Chairmanship of Miss E.R. Donnelly was sent to the parties and was unanimous. It was that :-

"(i) The Applicant was entitled to four weeks holiday for the holiday year from January to December 1999 under the Working Time Regulations 1998. The Tribunal awarded the Applicant £1,140.93 less National Insurance Contributions;

(ii) In the alternative the Tribunal found that there were unlawful deductions of £1,140.93 less National Insurance Contributions and ordered the Respondent to pay that sum to the Applicant."

35. On the 4th August Bold Transmission lodged its Notice of Appeal. It claimed:-

"We do not believe this was the intention of the Working Time Regulations; we submit it is intended for rest and recuperation from the rigours of industry. Mr Taree has indicated that he does not expect to return to work which means that we would be liable for this expense every year until retirement age or alternatively attempt to dismiss him and be open to claims of disability discrimination. Although advised there were only two Tribunal members present we were not told it was the employer representative who was absent which we feel gave an unfair bias. The Chairperson "strongly urged" me to appeal against their decision."

36. On that last point, the Chairman, on being sent a copy of the Notice of Appeal, wrote to the Employment Appeal Tribunal saying inter alia:-

"I did indeed explain to the Appellant in this case that there was an arguable point of law and that he should seriously consider an appeal. The company was unrepresented and both my fellow member and myself were concerned that in these circumstances the company might not appreciate that this was a new area of the law and one which was open to two interpretations.

With regard to bias, so far as I was aware, it was the Trade Union member who was absent. We certainly were not biased in favour of either party and I think that is demonstrated by our encouraging the company to appeal. Our reasons for our decision are given in detail in the decision itself."

37. As we mentioned, Bold Transmission has not appeared before us and it has not been necessary to look into any possible question of bias.
38. The reasoning of the Tribunal in the Taree case includes the following more relevant findings namely:-

"On or about the 1st August 1997 the Applicant suffered an injury at work. He went off ill and has not returned to work since that date. He is, however, still employed by the Respondent."

"On the 28th November 1999 the Applicant wrote to the Respondent requesting his accrued holiday for the previous year and his holidays for the current year. The Applicant asked the Respondent to confirm and consult with him in respect of his continuing employment and also to confirm that he was entitled to holiday pay. He received no reply to that letter. As a result, he wrote again on the 28th December to the Respondent indicating that he wanted to take his holiday and again informing the Respondent that he believed that he was entitled to be paid for his holidays. He asked the Respondent to confirm by the 8th January 2000 what the position was. He indicated that if the Respondent did not respond or deal with this matter he might treat their behaviour as a dismissal and pursue a claim before an Employment Tribunal. Again he received no response from the Respondent ..."

"[The Managing Director of Bold Transmission, Mr Lowe] said that they had taken advice from a Trade Union and that because he, the Applicant, had not worked he was not entitled to any pay or holiday pay."

"The Respondent's holiday year is from January to December in each year. Each employee is entitled contractually to four weeks paid holiday, plus public holidays. The four weeks can now be taken at any time."

"Mr Huntington [who appeared below for Mr Taree] conceded that the claim was for holiday pay for the year January to December 1999 only."

"The Tribunal found that the Applicant was entitled to his four weeks holiday pay for the leave year 1999 plus nine days statutory holidays for that year."

"The Tribunal cannot see why an applicant who is absent on sick leave becomes disqualified from right to holiday leave."

39. Whilst there may have been some later change as at the date of the IT1 it was Mr Taree's own assertion that the leave year was a calendar year.
40. In the course of its decision the Tribunal disagreed with the earlier decision by another Tribunal in Warnes -v- Situsec Contractors Ltd., 600394/99. The Tribunal there had held that a person who was off sick was not a person who was working within Regulation 2 (1). The difficulties about such a view include that Regulation 13, as we have seen, makes no requirement of a "worker" that he should have worked and that if absences on sick leave were to deny or, perhaps in some proportionate way, to reduce entitlement to annual leave, one could reasonably expect express provision in that behalf, yet none is to be found. In our view the Tribunal was right to disagree with Warnes. On the construction we have given to the Regulations we detect no error of law in the Tribunal's decision in this Taree case.

Macredie -v- Thrapston Garage

41. Alone of the three matters before us, Mr Macredie's appeal involves Regulation 14. That provides:-

"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 (1) differs from the proportion of the leave year which has expired.

(2) Where the proportion of leave taken by the worker in 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 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 x B) - C

where

A is the period of leave to which the worker is entitled under regulation 13 (1);

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.

(4) A relevant agreement may provide that, where the proportion of leave taken by the worker exceeds the proportion of the leave year which has expired, he shall compensate his employer, whether by a payment, by undertaking additional work or otherwise."

42. In this matter the employee lost his case and it is Mr Macredie therefore who appeals. He is represented by Mr Carr. Thrapston is unrepresented.
43. Mr Macredie began his employment in September 1996. In February 2001 Mr Macredie lodged his IT1 for "failure to pay holiday pay; unlawful deductions". He said that his employment had ended on the 30th November 2000. He said:-

"Upon my termination, I was paid my usual entitlements. Unfortunately when I checked on how much holiday pay the employer had given me, I believe I was short of the appropriate amount. The employer has only paid me £334.62 . I had completed 11 months of the current holiday year, I terminated my employment by issuing appropriate notice; it is my belief that I was entitled to £935.41 holiday pay. However deducting what I was already paid, I believe I am now owed £600.79 ......"

44. On the 23rd March Thrapston Garage put in its IT3. It said:-

"During the year 2000 Mr Macredie worked only 17 weeks. His annual leave entitlement was calculated on this basis. He was absent, and paid s.s.p. for a total of 23 weeks 2 days. He is claiming holiday pay for his period of sick leave. We do not believe he should receive both sick pay and holiday pay in respect of the same period."

45. On the 10th April 2001 there was a hearing at the Employment Tribunal and on the 20th April 2001 the decision, of the Tribunal at Leicester under the Chairmanship of Mr J Blackwell, was sent to the parties. Mr Macredie was held to have resigned on 24th November 2000. His leave year was held to be the calendar year. The unanimous decision of the Tribunal was that the Applicant's claim in respect of unlawful deduction from wages failed and was dismissed. The Tribunals' reasoning included:-

"The question we have to answer can be put quite shortly, namely, in assessing Mr Macredie's entitlement under Regulation 14 "Is he entitled" to leave accrued during a period when he was absent from work through sickness and receiving statutory sickness pay. We conclude that he was not for the following reasons ...

(a) The purpose of the 1998 Regulations is to safeguard the health of workers to ensure that they take adequate breaks from work both on a weekly basis and by reason of taking holiday leave. We do not see that a person who is off sick is in a position to take leave from work.

(b) Although we appreciate that the definition of "working time" in Regulation 2 (1) has no direct application to Regulations 13-16 which applies strictly to entitlement to leave, nonetheless we believe that the regulations should be read as a whole and that by analogy entitlement to a payment under Regulation 14 can only accrue when the worker satisfies the definition of "working time". We do not see that a worker can do so whilst on sick leave.

(c) We further do not believe that an employee can be entitled within the meaning of Regulation 14 to accrue the right to a compensation payment whilst at the same time receiving either the statutory sick pay or some contractual form of sick pay because this would mean that the worker could be compensated twice."

46. On the 1st June 2001 Mr Macredie lodged his Notice of Appeal.
47. Because the Tribunal found there was no entitlement in Mr Macredie to annual leave it does not seem to have looked in any detail to the manner in which notice had been given, if it had, under Regulation 15, nor to see whether there had been either a refusal to permit an exercise of a right under Regulation 30 (1) (a) or a failure to pay an amount due under Regulation 30 (1) (b). However no point seems to have been taken below as to jurisdiction and the amount due to Mr Macredie, if any was, had been agreed between the parties at £600.79.
48. Looking to the particular sub-paragraphs (a), (b) and (c) in which the Tribunal gave its reasons for its conclusion we would respectfully disagree with their reasoning as follows.
49. As for the Tribunal's paragraph 5 (a), it is impossible to disagree with the view that the broad, but not sole, purpose of the Regulations (like that of the underlying Directive) is to safeguard the health and safety of workers. But to state that general purpose does not answer the question of whether the words that have been used to implement that broad purpose exclude from benefit those on long-term sickness absence. We have not found words to exclude them and there is nothing in our construction which curtails the efficacy of the Regulations to serve the described broad purpose.
50. As for the Tribunal's paragraph 5 (b), even reading the Regulations as a whole does not entitle the Tribunal to read in a requirement that, if he is to be entitled to annual leave, a worker must have put in some "working time". No such words are to be found. The legislation could have so provided; it did not. Moreover, if it had, difficult questions would have arisen about how much working time had to be put in and as to what was the reason why the specified amount was not served if it was not.
51. As for the Tribunal's paragraph 5 (c), it feared that workers would be compensated twice over. Mr Macredie was looking to his employer to be paid "holiday money" once over only; there is no suggestion he was entitled to holiday money from anyone but his erstwhile employer. Whether, in respect of his time off sick, Mr Macredie had been entitled to receipts (either as sick pay or as accruing holiday entitlement) from anyone other than Thrapston Garage (which seems not to have been proved) was not a matter between that employer and its employee or for the Tribunal. Whether anyone else can recoup from Mr Macredie (as, again, was unproved) is not (statutory recoupment provisions apart) a matter for the Tribunal and if there is no provision under which anyone could so recoup that is still less a matter for the Tribunal.
52. In our view Mr Macredie's case falls within Regulation 14. Accordingly we allow Mr Macredie's appeal and, given the agreement as to quantum, order that he be paid £600.79.

Generally

53. Although, Regulation 17 apart, we have not found any material ambiguity in the 1998 Regulations, we do have some doubt as to whether, if the legislators had been interrupted during their framing of these Regulations and had been told that the conclusions to the questions we have had raised before us would be as we have given them, they would have agreed that was, indeed, their intention. It can be seen that the conclusion at which we have arrived does have possibly unintended social and employment consequences. Employers may be driven to terminating employment rather than letting it continue where there is a long-term sickness absence. To avoid the risk of that happening employees on long-term sickness leave may report back to work earlier than is medically desirable. In the absence of any express reference in the Working Time Regulations (other than in the somewhat Delphic Regulation 17) dealing with possible inter-relation between annual leave and other reasons for absence it is hard to be sure that the effect at which we have arrived is truly (so far as the legislature is concerned) a considered and intended effect. That, though, as it seems to us, is a matter not for us but for the legislature. Dealing simply with the Regulations as they stand, we dismiss the appeals in the Kigass and Bold Transmission Parts cases and allow it in the Macredie case. In the Macredie case the employer, Thrapston Garage, is to pay the agreed sum of £600.79 to Mr Macredie.