The claimant was employed as a security guard, being paid only for the hours he worked and without any guarantee of a minimum number of hours per week. Over a number of years, the claimant raised grievances relating to cancelled bookings,site bans, claims for expenses and shortfalls in holiday pay. The last straw occurred when the claimant was refused payment for holiday he took in March which was the last month of the holiday year, and he resigned, claiming unfair constructive dismissal and unpaid holiday pay. The respondent claimed that the claimant had not complied with the provisions contained within the holiday entitlement contract, including a failure to give enough notice, despite the fact that the claimant did not have any work for that month anyway. The ET rejected the claim of unfair dismissal, saying that ‘a genuine disagreement as to the contractual terms does not constitute a breach of contract’.

At the EAT, the main ground of appeal was whether either statutory or contractual provisions as to notice can operate as to prevent an employee taking his full statutory leave. The judge considered the Working Time Regulations and asked himself the question;

‘is the employer legally obliged to permit an employee to take all of his paid leave within the leave year even if requested by the employee towards the end of the leave year at a time when it may not fit in with the staffing patterns of the business?’

The judge concluded that the appeal must succeed since any contractual provisions ‘must operate during the whole of the leave year’, and ‘must not be operated by an employer in an unreasonable, arbitrary or capricious way as to deny any entitlement lawfully requested’.

_______________________

Appeal No. UKEAT/0081/09/CEA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal
On 4 September 2009

Judgment handed down on 18 January 2010

Before
HIS HONOUR JUDGE ANSELL
MS P TATLOW
MR S YEBOAH

MR J LYONS (APPELLANT)

MITIE SECURITY LTD (RESPONDENT)

Transcript of Proceedings

JUDGMENT

APPEARANCES

For the Appellant MR PETER EDWARDS
(of Counsel)
Instructed by:
Messrs Thompsons Solicitors
247 The Broadway
Wimbledon
London SW19 1SE

For the Respondent MR RICHARD GREGORY
(of Counsel)
Instructed by:
Messrs Mitie Security Ltd
132 Atlantic House
Permiter Road East
London Gatwick Airport
West Sussex RH6 OJJ

**SUMMARY
*WORKING TIME REGULATIONS
*Holiday Pay

Entitlement to minimum paid holiday leave can be subject to fairly operated statutory or contractual notice requirements to an employer.

**HIS HONOUR JUDGE ANSELL
Introduction
**1. This has been the hearing of an appeal against a judgment of a London (South) Tribunal chaired by Employment Judge Taylor.  They sat on 24 September 2008 and in reasons delivered on 13 November 2008 dismissed complaints of unfair constructive dismissal and pay in lieu of untaken holiday leave pursuant to the Working Time Regulations 1998 (as amended).  Leave for this hearing was given by HHJ McMullen QC on a sift by Order dated 18 February 2009 based on a fresh Notice of Appeal.  That notice had raised issues both in relation to the Working Time Regulations and the issue of constructive dismissal.

**The Facts
**2. We set out firstly the facts of the case which we take in part from the judgment.  However, we wish to make it clear at the outset that we find the Tribunal’s analysis of the key facts to be at times deficient and it has been necessary for us to refer to the documents that were before the Tribunal in order to obtain the complete and accurate picture.

3. The Appellant was employed as security officer for the Respondents who employ some 4,100 security staff who they supply to their clients at various locations.  The Appellant was only paid for the hours that he worked and the Respondents did not guarantee a minimum number of workings hours per week.  The provision in respect of holiday pay was contained in clause 5 of the most recent employment contract, dated 1 July 2007.  Under the heading, “Holiday Entitlement” the relevant provisions were:

“5. HOLIDAY ENTITLEMENT

a) The holiday year runs from 1st April to 31st March.

b) In each holiday year your entitlement to paid holiday will accrue evenly throughout the year on 1st of each calendar month worked.

c) You will be entitled to an annual entitlement of 4 weeks’ paid holiday.  This entitlement will be paid at a maximum of 48 hours per week, prorated if you work less than 48 hours per week.

d) All applications for holiday must be made by completing the Company’s standard holiday request form and submitting it for approval to your Line Manager.  The form wherever possible should be submitted at least 4 weeks prior to the commencement of the holiday.  Applications for holidays at shorter notice will be considered on their merits and subject to staffing requirements.

e) A maximum of 2 weeks may be taken at any one time (including weekends and Bank Holidays) unless you have the written approval of a senior manager of the Company.

f) No holiday may be taken within the first 13 weeks of employment.

g) No holiday may be taken from 20th December to 4th January inclusive in any year, except where written permission is given.

h) All holiday must be taken during the relevant holiday year and may not be carried over to the following year.  Any holiday pay for holiday entitlement not taken in the relevant holiday year will be forfeited.

i) Requests for unpaid leave of absence will be considered on their merits and subject to staffing requirements.

j) If you leave the Company and have already taken paid holidays exceeding your accrued entitlement, the overpayment for holidays taken but not accrued will be deducted from your final pay or from any other money due to you on termination of your employment.”

4. The employment commenced on 21 October 1997, and in subsequent years the Appellant raised a number of grievances relating in particular to occasions when he was banned from sites belonging to certain clients, shortfalls in holiday pay and also claims for expenses when he arrived on sites only to find the booking had been cancelled.  He had had to issue four separate Tribunal claims in respect of the alleged holiday pay shortfall but it does appear that most of his grievances had been resolved.  On 18 March 2008, he had sent a letter of grievance concerning three shifts on 29 February, 1 March and 2 March which he believed had been allocated to him but which he believed subsequently to have been cancelled.

5. As is apparent from the terms of clause 5, the holiday year ended on 31 March 2008 and by the beginning of March the Appellant had nine days’ leave still due for which he would receive payment when taken as holiday leave.  As at 6 March we were told that the Appellant had no further work scheduled for that month although he could always be called in at short notice.

6. It is not in dispute that on 6 March he sent a fax to his employers requesting payment of those remaining nine days before the end of the current leave year, namely 31 March.  Neither we nor the Tribunal have seen the fax.  Regrettably it is no longer in the Respondent’s possession and the Appellant has not kept a copy.  It is not clear whether the Appellant actually specified which days he wanted to take as leave during March.  The position of the parties before us was that he did not make a specific request for days nor did he use the leave request form referred to in clause 5 above.

7. We do not know how the Respondent reacted to this request.  There is no evidence about their initial response.  The next stage appears to be that on 1 April the Appellant found out that the nine days’ leave had not been paid and he sent a grievance letter on that date.  A grievance meeting was held on 9 April in which he raised his complaints concerning the outstanding holiday pay, the site bans and the cancelled shifts at the beginning of March.  The employer’s substantive response was set out in the letter of 23 April 2008 as follows:

“During the meeting you stated that there was one occasion when you attended Gate 3, St Thomas Hospital and you were informed shortly after you arrived on site that you were banned.  After looking into this issue we have found that you are not site banned from St Thomas Hospital and this was a mistake made by control.  Unfortunately we are unable to find out exactly what happened on this occasion as it occurred in December 2007.  We can confirm that you were paid £33.00 for your inconvenience on this particular day and can only apologise if this has caused distress.

As part of your grievance you also mentioned that control booked you in to work at Overbury’s on 29th February, 1st March and 2nd March.  After working your shift on 29th February the site manager informed you that you were not required for the following two shifts.  Upon investigation, it was found that you were not scheduled into Overbury’s for the 1st March or 2nd  March and the regular guard was scheduled into the shift.  Due to the fact that you were never scheduled in for these shifts, there must have been some miscommunication between yourself and the controller.  If you are able to provide with the name of the controller, they will be dealt with accordingly.

You also stated during the meeting you stated that you applied for the remainder of your annual leave to be paid; this request was made on 6th March 2008.  As you are aware it states in your contract you must give a minimum of 4 weeks notice for an annual leave request and annual leave cannot be carried over to the following year.  We are also unable to pay annual leave whilst you are still actively working.”

8. The Appellant’s response was to resign by letter dated 26 April, citing the refusal to pay holiday pay and the various occasions when he had been banned from client sites.  There was an issue as to whether the first ET1 was ever received.  A replacement ET1 claimed unfair dismissal and the outstanding holiday pay.  In the details of his claim the Appellant cited the previous refusals to pay holiday pay and also the site bans.  It was abundantly clear that the unfair dismissal claim was based on a case of breach of trust and confidence with the failure to pay the nine days’ holiday pay being the last straw.  We therefore turn to the two issues in the case and the Appellant’s complaints in relation to the Tribunal’s conclusions.

**Unfair Dismissal
**9. In paragraph 4 of the Tribunal’s reasons they set out the Appellant’s complaints in relation to the occasions when he would arrive at the site only to find that the booking had been “cancelled or reassigned or that the client had banned the Claimant from working at the site in question”.  The Tribunal noted that the Appellant was often paid wages by way of compensation but still might be out of pocket having incurred travel expenses.  In paragraph 5 they then went on to refer to the non payment of holiday pay in March 2008 and concluded, in these terms:

“The Claimant resigned in response to the refusal on 26 April 2008 and to the consequential refusal of the Respondent’s to pay him holiday pay.  The Claimant also took into consideration his general feelings of dissatisfaction arising out of the past history of late cancelled bookings and his actual or purported ban from one or more sites.”

10. The Tribunal then went on to set in general terms the legal principles referring to Section 95 of the Employment Rights Act 1996 and the cases of Weston Excavating Ltd v Sharp [1978] IRLA 27 and Woods v WM Car Services Peterborough Ltd [1981] ICR 666.  The core of the Tribunal’s judgment on this issue can be seen at paragraph 10 as follows:

“The Tribunal found that the Claimant failed to establish that the employer’s conduct of which he complains constituted a breach of either an express or an implied term of his contract of employment.  In arriving at our decision, the Tribunal did not accept the Claimant’s contention that the Respondent had breached his contract of employment by refusing him holiday leave and consequential holiday pay.  The Claimant’s contract of employment allowed for some flexibility in the Respondent’s response.  Furthermore, the contract allowed for a right of appeal in the event of a dispute.  We accepted the submission of the Respondent that a genuine disagreement as to the contractual terms does not constitute a breach of contract.”

11. Mr Edwards, on behalf of the Appellant, complains that, although the Tribunal in paragraph 8 reminded themselves that their duty was to look at the employer’s conduct as a whole and determine whether it was such that its effect, judged reasonably and sensibly, was that the employee could no longer be reasonably expected to put up with it, when they conducted their factual analysis there was a failure to consider the cumulative effect of the site bans, the previous holiday problems and the cancelled shifts.  This was the Appellant’s case, as was clear from his ET1 and his witness statement and the letters.  He argued that if the Tribunal had decided to reject any or all of these previous incidents as contributing to the alleged breach of trust and confidence, it was incumbent upon them to say so.  He further submitted that even if contrary to his contentions, the Tribunal were correct in finding that the employers were entitled to reject the final holiday pay claim as a breach they failed to consider whether their behaviour over this issue could amount to the “last straw”.

12. For the Respondent, Mr Gregory argued that the previous grievances appeared either to have been resolved to the Appellant’s satisfaction or at least had been answered in correspondence.  He pointed in particular to a handwritten note on the Appellant’s letter on 12 January which at the top had the word “resolved”.  He also argued that most of these incidents had occurred some time prior to the Appellant’s resignation.  He also contended that the first sentence of paragraph 10 of the Tribunal’s decision, whilst not setting out the incidents in detail, made a finding that the employer’s conduct did not constitute a breach of either an express or implied term of the employment contract.  He argued that paragraph was not only dealing with the holiday pay issue although it was right to focus upon it as the last incident.

13. On this issue we agree with the Appellant’s submissions.  Whilst the Appellant was acting in person and may not have set out his case with the precision of a lawyer, it was readily apparent from the ET1 witness statement and letters that his resignation was prompted by the cumulative effect of the various incidents relating to previous holiday pay, site bans, cancelled shifts with the failure to pay the nine days in March being the final straw.  It seems to us that the Tribunal’s judgment required a more detailed analysis setting out the history of these various incidents and their view of the cumulative effect of the Respondent’s behaviour.  We do accept, however, that at the heart of their decision in relation to constructive dismissal must be whether or not the Tribunal were correct in relation to the refusal to pay holiday pay.  We, therefore, turn to that issue.

Holiday Pay
14. The Tribunal set out the facts of the dispute in paragraph 5 as follows.  Their conclusions were set out in paragraph 12.  The relevant Working Time Regulations for the purposes of this case are Regulations 13, 15 and 17 as follows:

“13 Entitlement to leave
(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 1997, 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 23rd November 1998 which has elapsed at the start of that leave year; and
(c) in any leave year beginning after 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 1st October 1998, on the date on which that employment begins and each subsequent anniversary of that date.

(4) Paragraph (3) does not apply to a worker to whom Schedule 2 applies (workers employed in agriculture) except where, in the case of a worker partly employed in agriculture, a relevant agreement so provides.

(5) Where the date on which a worker's employment begins is later than the date on which (by virtue of a relevant agreement) his first leave year begins, the leave to which he is entitled in that leave year is a proportion of the period applicable under paragraph (2) equal to the proportion of that leave year remaining on the date on which his employment begins.

(6) Where by virtue of paragraph (2)(b) or (5) the period of leave to which a worker is entitled is or includes a proportion of a week, the proportion shall be determined in days and any fraction of a day shall be treated as a whole day.

(7) The entitlement conferred by paragraph (1) does not arise until a worker has been continuously employed for thirteen weeks.

(8) For the purposes of paragraph (7), a worker has been continuously employed for thirteen weeks if his relations with his employer have been governed by a contract during the whole or part of each of those weeks.

(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 worker's employment is terminated.

1. 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.

(6) This regulation does not apply to a worker to whom Schedule 2 applies (workers employed in agriculture) except where, in the case of a worker partly employed in agriculture, a relevant agreement so provides.

1. Entitlements under other provisions
   

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. Regulation 2 defines relevant agreement as follows:

“… in relation to a worker, means a workforce agreement which applies to him, any provision of a collective agreement which forms part of a contract between him and his employer, or any other agreement in writing which is legally enforceable between the worker and his employer;”

16. It can be seen, therefore, that the scheme of the Regulations in relation to holiday pay is that Regulation 13 provides the, “Entitlement of four weeks” and Regulation 15 sets out a mechanism for the worker who wishes to take the leave, giving notice to his employer twice as many days in advance of the number of days to which the notice relates, with the employer having the ability to put in a notice which can have the effect of refusing leave either in whole or in part.  Again, that notice has to be given subject to the time limits in Regulation 15(2) with the ability to vary these details by means of a “Relevant agreement”.  The question, therefore, raised on this appeal is whether these notice requirements, whether statutory or, indeed, contractual, are superseded by an inalienable right of an employee to take paid leave within the leave year pursuant to the entitlement granted in Regulation 13.  Or, put another way, is the employer legally obliged to permit an employee to take all of his paid leave within the leave year even if requested by the employee towards the end of the leave year at a time when it may not fit in with the staffing patterns of the business.

17. The first issue that troubled us is whether the Appellant requested leave or was he simply asking to be paid for the nine days that he was due.  As we have indicated above, there was no evidence that he asked for particular days in March nor did he use the correct holiday request form.  On behalf of the Appellant, Mr Edwards argues that on the facts of this particular case, it does not matter whether days were requested or not.  The Appellant was not due to work and, therefore, to be paid at all during March and he was, therefore, only asking for nine days of this period to be treated as paid days.  Certainly it appears the Tribunal was not unduly concerned on this issue when, in paragraph 5, they referred to the Appellant “In applying for the leave and payment in respect of that leave”.

18. Mr Edwards went on to argue that even if the employers waived the requirement for a holiday request form, the Tribunal failed to consider the remaining provisions contained in clause 5(d).  The second sentence of that clause provides that the holiday request form, “Wherever possible should be submitted at least four weeks prior to the commencement of the holiday”.  He argued that the Tribunal gave no consideration to the phrase “wherever possible” in relation to the Appellant’s request.  The third sentence provides that “Applications for holidays at shorter notice will be considered on their merits and subject to staffing requirements”.  He argued that the Tribunal again carried out no analysis of that particular provision.  Although the Tribunal’s decision referred to the notice being, “Necessary for the Respondent to ensure consistency of service provisions to its clients” there was no analysis of the particular staffing requirements that lead the employers to refuse the Appellant’s application, particularly as has already been stated that the Appellant was not due to work for the rest of March.  The employer’s refusal contained in a letter of 23 April appeared to ignore the contractual provisions and merely refused leave or payment because of the failure to give four weeks’ notice.

19. In response, Mr Gregory argued that the Tribunal in paragraph 5 of the judgment did deal sufficiently with the contractual provisions, albeit that they did not quote those provisions or analyse them in detail.  He submitted that the reference, “Could refuse that leave if the employees gave shorter notice” and that, “One month’s notice was necessary for the Respondent to ensure consistency of service provisions” was a sufficient analysis of these contractual provisions.

20. We cannot agree with this contention.  Clause 5(d) of the contract set out three particular elements that had to be analysed by the Tribunal, namely why the Appellant did not submit his form at least four weeks prior to the commencement of the holiday, the merits of an application for holiday at shorter notice and the Respondent’s staffing requirements for that period.  In our view, paragraph 5 of the judgment did not deal adequately or indeed at all with these three important issues.

21. Mr Edwards then went on to consider the inter-relationship between Regulations 13, 15 and 17.  He argued that whilst Regulation 15(5) permits the notice provisions under Regulation 15 to be varied or excluded by a “Relevant agreement” and concedes for the purpose of this case that the employment contract was such an agreement, he pointed to the conflict with Regulation 17 that allows a worker to take advantage of whichever right is more favourable, either a contractual or a statutory right.  He submitted that on the facts of this case the statutory notice provision was more favourable since for a required holiday of nine days only 18 days’ notice would have to be given by an employee as opposed to the period of four weeks set out in the contract.  He also submitted that the overriding entitlement to four weeks’ holiday (as amended by Regulation 13(a) to provide for additional annual leave as from 1 October 2007) which entitled an employee to take his paid annual leave within the leave year was more favourable than a contractual provision which could be effective in denying the Appellant his inalienable right to take his leave within the leave year.  Indeed, as Mr Edwards developed his argument, it was clear that the same could apply to the notice provisions in Regulation 15 since an employer’s counter notice could deny leave requested by an employee.

22. On the narrow issue of the conflict between Regulation 15 and 17, Mr Gregory responded that under Regulation 15(5) the notice provisions could be varied by a contract; therefore the Regulation has the effect of reading in those varied contractual provisions into the Regulation.  Regulation 17, he argued, was restricted to any potential conflict of entitlement as between the Regulations and a contract as opposed to referring to any conflict in the notice provisions, and points in particular to the heading of Regulation 17, “Entitlements under other Provisions”.  He gave as an example this case where the statutory provisions, as amended, would allow 22 leave days per year as opposed to the four weeks’ paid holiday contained in the contract.  He also argued that on the facts of this case, the notice provisions under the contract, although requiring a longer period, did introduce an element of discretion even where shorter notice was given which was not available within Regulation 15.  We agree with Mr Gregory that the notice provisions contained in Regulation 15 are capable of being varied by Regulation 15(5) even if they impose a longer period of notice.  Regulation 17 would not in our view affect such a variation as it did not affect the leave entitlement.

23. However, we return to the main ground of this appeal; namely whether either statutory or contractual provisions as to notice can operate so as to prevent an employee taking his full statutory leave.  Put in practical terms, what is the position of an employee who, towards the end of a leave year, whether it be in December or March, requests to take his outstanding holiday before the end of the year only to be met with an objection from an employer that staffing requirements within the business meant that an employee could not take some or all of the outstanding days.  Indeed, under the Regulations there is no requirement for an employer to explain why he cannot take leave on a particular day.  Mr Edwards argues these provisions are, therefore, less favourable than the inalienable right under Regulation 13 to take full holiday within the holiday year.

24. He took us firstly to the EC Directive 2003/88/EC of 4 November 2003 concerning certain aspects of the organisation of working time.

25. The first recital provides:

“Whereas (1) Council Directive 93/104/EC of 23 November 1993, concerning certain aspects of the organisation of working time which lays down minimum safety and health requirements for the organisation of working time in respect of periods of daily rest, breaks, weekly rests, maximum weekly working time, annual leave and aspects of light work, shift work and patterns of work has been significantly amended.  In order to clarify matters, clarification of the provisions in question should be drawn up.”

26. He then referred us to Article 3, daily rest, Article 5, weekly rest period and Article 7, annual leave:

“Article 3 Daily rest
Member States shall take the measures necessary to ensure that every worker is entitled to a minimum daily rest period of 11 consecutive hours per 24-hour period.

Article 5 Weekly rest period
Member States shall take the measures necessary to ensure that, per each seven-day period, every worker is entitled to a minimum uninterrupted rest period of 24 hours plus the 11 hours' daily rest referred to in Article 3.
The minimum rest period referred to in the first subparagraph shall in principle include Sunday.
If objective, technical or work organization conditions so justify, a minimum rest period of 24 hours may be applied.

Article 7 Annual leave

1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.
   
2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.”

27. He argued that the word, “entitled” appears in all three Articles and suggests that there are three possible meanings.  Firstly, the employer can simply take a passive role, waiting for the employee to exercise his right.  Secondly, employers must force an employee to take their leave even if the employee does not wish to do so.  Or thirdly, the employers must ensure that leave is taken and, in particular, if it is coming towards the end of a leave year period, must ensure that outstanding leave is taken by the employee.

28. He then referred us to a European Court of Justice decision in Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland [2006] IRLR 888.  The case concerned Department of Trade and Industry guidelines in relation to daily and weekly rest periods, which expected that, “Employers must make sure that workers can take their rest periods, but are not required to make sure that they do take their rest”.  The European Commission took the view that in the light of that guidance, the UK had failed to take all necessary measures to implement the rights of workers to take daily and weekly rest period.  The Advocate General’s opinion which was approved by the Court set out the position in this way:

“56. The United Kingdom infers, in particular, from wording of Articles 3 and 5 of the Directive that workers must merely be granted a legal entitlement to their daily and weekly rest periods (‘ensure that… every worker is entitled to…’), but employers do not have to ensure that rest periods are actually observed.  Unlike other provisions of the directive, no obligation of result arises from those provisions.  It cannot be required of employers to force workers to actually invoke the rest periods due to them.  In that sense the DTI guidelines merely clarify the limits to employers’ responsibility.

1. In the Commission’s view, s.5 of the DTI guidelines encourages a practice on the part of employers which does not comply with the requirements of the Directive.  It is suggested to employers that they do not have to ensure that their workers actually take the rest periods granted to them.  At the very least, the guidelines are a disincentive to employers to ensure that that takes place.
   

1. In order to secure effective protection of the safety and health of employees, it is necessary that they are actually granted the minimum periods of rest provided for.  That presupposes that workers are put in a position by their employer actually to take the rest periods which are due to them and are not, for example, deterred from doing so by factual constraints.
   

1. Certainly it will normally be excessive, if not even impossible, to demand that employers force their workers to claim the rest periods due to them.  That was also conceded by the Commission in the oral procedure.  Accordingly, the United Kingdom correctly points out that, not least for practical reasons, the employer’s responsibility concerning observance of rest periods cannot be without limits.
   

1. However, an employer may on no account withdraw into a purely passive role and grant rest periods only to those workers who expressly request them and if necessary enforce them at law.  Not only the risk of losing a case, but also the risk of becoming unpopular within the business merely for claiming rest periods could distinctly hamper effective exercise of those rights to ensure protection of the health and safety of workers.
   

1. Instead, it is for the employer actively to see to it that an atmosphere is created in the firm in which the minimum rest periods prescribed by Community law are also effectively observed.  There is no doubt that this first presupposes that within the organisation of the firm appropriate work and rest periods are actually scheduled.  In addition it must, however, be a matter of course within a business, in practice as well, that workers’ rights to rest periods not only exist on paper but can effectively be observed.  In particular, no de facto pressure should arise which may deter workers from actually taking their rest periods.  In that regard it is irrelevant whether such pressure derives from the employer – for example through performance targets set by him – or from the fact that some of the employees do not use up the rest periods due to them, and therefore a kind of group pressure arises for other workers to do the same.”

29. The Court’s conclusions were contained in paragraphs 42 to 44 of their judgment.

“42.  A Member State which, in the national measure implementing Directive 93/104, provides that the workers are entitled to certain rights to rest and which, in the guidelines for employers and workers on the implementation of those rights, indicates that the employer is nevertheless not required to ensure that the workers actually exercise such rights, does not guarantee compliance with either the minimum requirements laid down by Articles 3 and 5 of that directive or its essential objective.

1. As the Advocate General rightly observed in point 67 of her Opinion, and as the Commission furthermore conceded during the hearing, compliance with the obligations set out by Directive 93/104 should not, as a general rule, extend to requiring the employer to force his workers to claim the rest periods due to them.  The employer’s responsibility concerning observance of the rest periods provided for by that directive cannot be without limits.
   

1. However, in the present case, by restricting the obligations on employers as regards the workers’ right to actually benefit from the minimum rest periods provided for in Articles 3 and 5 of Directive 93/104 and, inter alia, letting it be understood that, while they cannot prevent those rest periods from being taken by the workers, they are under no obligation to ensure that the latter are actually able to exercise such a right, the guidelines are clearly liable to render the rights enshrined in Articles 3 and 5 of that directive meaningless and are incompatible with the objective of that directive, in which minimum rest periods are considered to be essential for the protection of workers’ health and safety (see, to that effect, BECTU, paragraph 49).”

30. Mr Edwards argued that although this case did not specifically refer to annual leave, since the word “entitled” was common to all three provisions, a similar approach should be applied; that therefore any notice provisions, whether they be in contract or in the Regulations, cannot be operated so as to deny the inalienable right to the minimum holiday.  Otherwise, he argued, there was nothing to prevent the notice provisions being operated in an arbitrary, capricious and unfair way.  He submitted that there can be no derogation from the entitlement under Regulation 13 other than the pro rata-ing of leave where the employment begins later than the date on which the first leave year begins (see Regulation 13(5)) and, in particular, he relied on Regulation 13(9) which specifies that leave has to be taken in the leave year in respect of which it is due and may not be replaced by a payment in lieu except when the employment is terminated.  He argued that since it is essentially a health and safety issue, an employer must ensure that the holiday leave is taken.

31. In response, Mr Gregory argued that the plain words of the Regulations did not provide support for the proposition that the statutory leave was an inalienable right and that effectively the employer was legally obliged to ensure that the employee actually took the leave to which he was entitled.  He argued that the Regulations for obvious practical and logistical reasons had to provide for an employee to give notice prior to exercising his “entitlement to annual leave”.  Secondly, he sought to distinguish the EC case; firstly because the case was not concerned as to whether the Regulations had properly implemented the Working Time Directive, but rather it related to the validity of the DTI guidance in connection with daily and weekly rest periods, and that the case made it clear that the employers were not legally obliged to ensure that the employees took all of the leave to which they were entitled.  In any event, he argued that there was a clear distinction between the daily and weekly rest periods and annual leave, referring in particular to the qualification in Article 7, namely that the entitlement is “in accordance with the conditions for entitlement to and granting of such leave laid down by national legislation and/or practice”.  He argued that that provision clearly envisaged that any entitlement clearly has to be subject to a mechanism whereby the employee can request leave and the employer can specify dates on which leave may or may not be taken.  He also argued that, as regards daily and weekly rest periods, since these are taking place whilst both employer and employee are in the workplace, the employer was in a much better position to make sure that they were taken.

32. He then referred us to the recent EC Decision of Stringer & Ors v Revenue & Customs Commissioners [2009] ICR 932 which determined that the right to paid annual leave was not extinguished at the end of a leave year where the worker had not had the opportunity to exercise that right because he was on sick leave, and referred us to paragraph 43 of the Court’s judgment.

“43. It follows that article 7(1) of Directive 2003/88 does not preclude, as a rule, national legislation which lays down conditions for the exercise of the right to paid annual leave expressly conferred by the Directive, including even the loss of that right at the end of a leave year or of a carry-over period, provided, however, that the worker who has lost his right to paid annual leave has actually had the opportunity to exercise the right conferred on him by the Directive.”

He argued that as a result of that paragraph, the Court clearly envisaged the situation whereby leave might be lost provided that the proper opportunity and mechanism had been put in place to allow for the entitlement to be claimed.  Indeed, he argued there was little point to the Rule 15 mechanism if it could be overridden by the inalienable right.  He argued that the Appellant’s position seemed to be that for most of a leave year, the mechanism could be operated but not towards the end of the leave year, which presented an impossible position for employers in terms of their staffing and requirements.

Conclusion
33. We have not found this an easy issue to resolve.  The absence of case law would suggest that employees have not been denied their reasonable requests for holiday entitlement, even towards the end of a leave year.  Employers will, of course, know that any unreasonable response would lead to grievances and even possible claims for constructive dismissal.  Clearly, managers generally take great care over making sure that full leave is taken with some contracts certainly permitting carryover of a small amount of unused leave.  The IDS Handbook on Working Time, in dealing with Regulation 15, makes the following comment on page 76:

“Employers would not be able to use a notice requirement effectively to defeat a worker’s entitlement to annual leave in any given leave year.”

34. That comment gives no justification for that somewhat bald statement.  We are satisfied that the right to the statutory leave is not inalienable in that it has been made subject to the notice provisions and indeed Article 7 envisaged that there would be, “conditions for entitlement” and that those conditions are set out in Regulation 15 subject to any contractual variation.  Clearly that mechanism must operate during the whole of the leave year and the mechanism must not be operated by an employer in an unreasonable, arbitrary or capricious way so as to deny any entitlement lawfully requested.  But it does seem to us that the mechanism, if operated correctly by both employee and employer, could result, as was envisaged in the Stringer case, in the loss of the right at the end of the leave year in respect of leave not taken.

35. Accordingly, this Appeal must succeed in relation to the Tribunal’s failure to deal with whether there was a breach of the contractual provisions in relation to holiday entitlement and the Tribunal’s failure to deal properly with the issue of constructive dismissal, particularly if the employers were in breach in relation to the holiday pay issue.  We believe the only proper course is for the matter to be remitted back to a different Tribunal for a rehearing.