Court rules holiday does not need to be retroactively recalculated if hours increase

Holiday_pay_2015The Court of Justice of the European Union (CJEU) has held that employees’ accumulated holiday does not need to be retroactively recalculated following an increase in their hours.

In the case of Kathleen Greenfield vs The Care Bureau, Greenfield worked part time with a holiday entitlement of 5.6 weeks a year, and took all her accrued annual leave for that period. From August 2012, her hours increased to an average of 41.4 hours a week and her employer specified that all hours, including overtime, would be used to calculate paid annual leave.

Greenfield requested a week of paid leave in November 2012, which was denied on the basis that she had taken her full entitlement in June and July 2012, while working fewer hours.

When Greenfield’s employment ended in May 2013, she was not paid in lieu of accrued annual leave, as she had taken it all.

She argued that the EU Framework Agreement on equal treatment of part-time workers and the Working Time Directive meant that the UK Working Time Regulations should be interpreted to provide that the leave she had already accrued on fewer hours should be adjusted to reflect her new working hours and not the hours worked at the time the leave was taken.

The CJEU held that employers are not obliged to provide that entitlement to paid annual leave already accrued, and possibly taken, be recalculated retrospectively according to an employee’s new working pattern.

However, the Court did rule that the employer should recalculate annual leave for the period after the increase in hours.

The Court had previously held that a change in working hours, particularly a reduction, cannot reduce the right to annual leave that the worker has accumulated during the period when they had worked increased hours.

Jillian Naylor, employment partner at Linklaters, said: “Calculating annual leave for workers on part time or variable hours can be difficult for employers. Most employers will not recalculate accrued holiday when a worker increases or decreases their hours.

“This is a common sense decision and will be a relief for employers in this situation as it confirms that their existing practice is correct.”