Facts
Lyons was employed as a security officer for Mitie Security. He was supplied to Mitie’s clients at various locations. Mitie did not guarantee a minimum number of working hours per week and Lyons was only paid for the hours actually worked. Mitie’s holiday year ended on 31 March.
At the beginning of March 2008, Lyons had nine days’ annual leave remaining, but as at 6 March he had no further shifts scheduled. On 6 March, he sent a fax to his employer requesting payment for the remaining nine days before the end of the leave year. On 1 April, he discovered the holiday pay had not been paid and raised a grievance.
Mitie responded to the grievance saying that, as stated in his contract, he was required to give a minimum of four weeks’ notice for an annual leave request. Lyons resigned and brought a tribunal claim for unfair dismissal and outstanding holiday pay.
Decision
The employment tribunal dismissed both the constructive unfair dismissal claim and the holiday pay claim. Lyons appealed to the Employment Appeal Tribunal (EAT).
The question before the EAT was whether the notice requirements for taking annual leave, whether statutory under regulation 15 of the Working Time Regulations 1998 or contractual, are superseded by an employee’s inalienable right to take paid leave within the leave year: is an employer legally obliged to permit an employee to take all of his leave within the leave year, even if requested towards the end of the leave year and without giving sufficient notice? Under regulation 15, a worker is required to give twice as much notice of leave as the number of days’ leave requested, but this can be displaced by notice provisions in the contract.
The EAT held the tribunal had failed to properly consider the notice requirements for taking annual leave under Lyons’ contract. However, the EAT also held that the right to statutory annual leave is not absolute in that it is subject to notice requirements and conditions for entitlement. The notice mechanism must not be operated by an employer in an unreasonable, arbitrary or capricious way so as to deny entitlement to leave, but, if correctly operated, could result in the loss of entitlement to leave at the end of the leave year.
The claim was remitted back to a different tribunal for re-hearing, as the tribunal had not considered whether the employer had breached the contractual provisions governing the employee’s right to take holiday.
Implications
This is a useful case for employers as it confirms that the right to statutory minimum annual leave is not absolute.
An employee who, towards the end of a leave year, requests to take his outstanding holiday before the end of the leave year can have his request refused on the basis of staffing requirements within the business, even if that means the employee will lose some holiday entitlement. This will, however, be subject to the contract of employment.
Employers should ensure that contracts expressly state that holiday requests are subject to the needs of the business and may be refused. However, any unreasonable rejection of a holiday request may potentially lead to a claim for constructive unfair dismissal, particularly if this results in leave being lost.
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This case has no impact on the situation in respect of employees who are on long-term sick leave. As decided by the European Court of Justice (ECJ) in Stringer v HMRC, workers must be permitted to carry over holiday if they have been unable to take it due to sickness absence.
Susan Fanning, employment partner, DLA Piper
