Holiday entitlement

At this time of the year, most thoughts are directed towards holidays –
either looking forward to them, being on them or reminiscing wistfully! The
good news, at least for employees with the track record of starting and
finishing jobs on a regular basis, is that holiday entitlement might be on the
increase. This is as a result of the proposed changes to the Working Time
regulations 1998 as a result of the UK losing a case in the European Court of
Justice on the current draft.

The UK’s U-turn

When the 1998 regulations were brought into force, the underlying directive
provided for a minimum 20 days a year paid leave entitlement for full-timers.
Member states were allowed a certain discretion in how the holiday should
accrue, and the UK took a wide approach. It held that in the first 13 weeks of
employment, no statutory holiday would accrue (regulation 13(7)).

A case brought by the union Bectu challenged that provision and won. The UK
has responded by issuing a proposal for consultation which makes the position
of workers on a series of short-term contracts much more favourable. It
concedes that holiday shall accrue at the rate of one-twelfth of the annual
entitlement for each month of employment. Fractions of a day accrued in this
way shall be disregarded if it is less than half and treated as a whole day if
it is a half or greater.

This means that anyone (according to my calculations) working more than a
third of a month (ie, 10 days or more) should be confident of being given a
day’s paid leave or pay in lieu of accrued but untaken holiday on the
termination of the contract. This entitlement contrasts with the previous rule
which meant that individuals needed to work 91 days before they accrued any
holiday.

Comparisons

This clarification of the directive by the ECJ will not affect many of the
workers in the European Union. According to recently published statistics,
Italians enjoy, on average, a massive total of 42 days paid leave each year.
This compares with the average in the UK, which is in the mid-20s. By contrast,
however, the average number of paid days leave per year in the US is only 13.

Conclusion

There is little or nothing that contract drafting can do to prevent these
entitlements since they are statutory rights. But employers need to be aware
that when they take on any worker – which will include a consultant or
freelancer as well as an employee – that rights of accrued holiday will shortly
be available far sooner than ever before. These costs need to be built into
everyone’s budgets.

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