Head to head: Holiday entitlement

Everyone enjoys a good holiday. Yet the UK is remarkably bad at providing it. Research by Mercer HR Consulting shows British workers enjoy the fewest days off in the EU, lagging behind the likes of Slovenia, Poland and Malta.

To challenge this, the government has introduced the Working Time (Amendment) Regulations 2007 to guarantee a legal right to 24 days’ holiday.

These come into force on 1 October 2007, with a second stage guaranteeing 28 days’ annual leave due on 1 April 2009.

Yet holidays can still be a remarkably contentious issue in the UK workplace.

Here we take a peek inside the contentious North Sea deal (see box, right), to see just how divisive the issue of guaranteeing four weeks’ holiday can be. A series of legal experts also comment on the implication of the new regulations in more general terms.

Chris Allen is health, safety, social and environment director, Oil & Gas UK
Alan Harvey is Amicus section national officer, Unite

Q Do offshore workers currently get four weeks’ holiday?

Chris Allen The typical North Sea worker is offshore for about 182 days a year and spends 172 days onshore, which gives enough time off to cover every weekend, 20 days’ leave and bank holidays, with another four to five weeks to spare. This is based on the standard offshore rota of ‘two weeks on, two weeks off’. However, many oil and gas companies have already negotiated more generous terms.

Alan Harvey No. Holidays should be taken when you are otherwise on rota to be at work and this is the whole argument. Employees are on rota to be at work 182 days and the new agreement with the Offshore Contractors’ Association (OCA) only provides 28 days’ holiday by October 2008. This means their rota will reduce to 154 days.

Q How are the employment tribunal cases linked to this agreement?

Chris Allen Employees have brought cases to the employment tribunal claiming their statutory rights have been infringed. They argue that under the regulations, they are entitled to an additional four weeks’ paid annual leave on top of the time they already spend onshore on field break. Part of the deal between Amicus and the OCA is that the legal challenges relating to holiday entitlement would be dropped and that no such claims will be pursued in the future.

Alan Harvey The tribunal cases for drilling and catering sectors will continue. The cases for OCA members will be withdrawn as the new agreement gives our members in the OCA 28 days’ holiday by October 2008.

Q What are the implications on working patterns of a ruling in favour of this belief?

Chris Allen The cases before the employment tribunal stem from the claimants’ belief that they are entitled to an additional four weeks’ paid leave on top of the time they already spend onshore. It is this belief that the industry contests.

Oil & Gas UK is concerned about the argument that all time spent offshore, even while off shift or asleep, should be deemed ‘working time’.

We believe that should such a principle be upheld in law, it would prove very serious for the industry. To keep within the law, which permits a maximum 2,304 hours to be worked over a year, oil and gas workers would only be allowed offshore for a total of eight days a month, with the following 20 days given as compensatory leave.

Alan Harvey Some companies are moving to ‘two on, three off’, the ones that remain on ‘two on, two off’ will obviously do less trips because they will only be working 154 days. Other companies are moving to ‘two on, two off, two on, four off’, which we believe meets the requirements.

Q What impact would this have on the industry?

Chris Allen It would create a chronic skills shortage. Oil and gas production doesn’t stop. We would need to recruit another 20,000 workers to keep the platforms in production. Large sections of North Sea production would have no option but to close down.

Alan Harvey The North Sea is a mature industry and the major oil companies make significant profits. We believe that the 28 days’ holiday can be well afforded. It may lead to a slight increase in employment, but the industry should be looking at recruiting and training needs anyway, as we already have a shortage of certain skills.

Q What would be the cost to the country?

Chris Allen If large sections of North Sea production were to shut down, the decline of the industry would be rapid. The cost to the country would be huge. It would destroy jobs offshore and onshore, where thousands of jobs in the supply chain and in local economies depend on the industry. The Treasury would be denied valuable tax revenues of around £10bn per annum, and the country would lose a vital source of energy.

Alan Harvey I do not believe there will be any loss to the Treasury as we are opening new fields and companies are still applying for licences to take the assets from the North Sea.

North sea battles over shore leave

A six-year legal battle between the Offshore Contractors’ Association (OCA) and the Unite and GMB unions over the holiday rights of 10,000 North Sea contract workers has only just been resolved.

The deal guarantees North Sea contract workers four weeks’ paid holidays for the first time and means most offshore contract employees will work a maximum of 154 days a year, compared with the current average of 175 days.

But there is still a delicate balancing act to perform as Britain’s oil companies claim the full implementation of the regulations and the EU Working Time Directive will lead to the closure of large sections of North Sea operations, hurling the £10bn-a-year industry into decline.

The dispute is also set to rumble on in a series of tribunal cases affecting workers in the catering, drilling and subsea sectors, who are not party to the new deal.

Holiday issues

• From 1 October 2007, the minimum entitlement will increase to 4.8 weeks or 24 days for an employee working five days a week.
• After 1 April 2009, annual leave may not be replaced by a payment in lieu, except on termination of employment. However, between 1 October 2007 and then, employers can pay in lieu of the extra 0.8 week as a temporary measure to manage transitional arrangements, such as recruitment or training.
• Part-time employees will effectively be entitled to the additional eight days on a pro-rata basis.
• The increase between October 2007 and April 2009 will be calculated proportionally. If a leave year starts in April and an employee works five days a week, their entitlement will rise by two days from October 2007 to March 2008.
• From 1 April 2009, the second increase will bring the entitlement to 5.6 weeks (28 days if the employee works five days a week).

Viewpoint

Angela Bowring, senior researcher,Incomes Data Services

The legislation has been introduced to give employees in low-paying industries some protection, as some employers are currently including bank holidays in people’s 20 days’ annual leave – so effectively only giving workers 12 days’ holiday. By bringing it under the umbrella of the law, it is formalising and protecting the legal right to have 20 days’ annual leave, plus bank holidays for the first time. Most employers won’t be affected because they already do this. And even after the changes come into force, the UK will still be joint bottom of the league for annual holidays out of the 22 EU member states we have studied.

John Cridland, deputy director-general, CBI

The government is right to introduce the extension gradually over the next two years, as a ‘big bang’ approach would have been more painful for employers. Many businesses – particularly retailers and health and social care providers – will welcome this as it will help them change shift patterns and absorb transition costs. Others may take advantage of the option to buy back extra holiday and pay more wages instead – giving them time to update pay structures. The majority of companies will also be pleased the government has taken a risk-based approach and ensured these regulations will not add to the costs of those who already comply.

Elizabeth Lang, solicitor, Bird & Bird

Employers who currently offer more than the new minimum paid holiday entitlement will not face additional costs but their administration of holiday may be affected. In particular, many employers currently make payments to workers in lieu of some holiday entitlement. From 1 April 2009, the ability to make such payments will be more limited as at least 28 days of holiday must actually be taken, though there is a transitional measure allowing the four-day increase from 1 October 2007 to be paid in lieu until 1 April 2009.

Mike Emmott, employee relations adviser, CIPD

Most organisations will not be affected by these changes as they already offer at least 28 days’ holiday. It’s only organisations with employment contracts that currently provide four weeks’ leave inclusive of bank and public holidays that will need to be revised. Employers should, however, check the wording of their contracts even if they are sure they comply with the new rules. Sectors that depend more heavily on part-time and temporary workers will suffer most. For example, those in the food processing and hospitality industry will need to check the legalisation and, in particular, the small print, to ensure they are compliant.

Holiday entitlement: Legal Q&A

UK has least holiday entitlement in Europe