You would be forgiven for thinking that much of the law in respect of employee holidays and holiday pay is settled, writes Head of Employment Jacqueline Kendal. The Working Time Directive, enacted in 1998, is elderly in employment terms. So how can there still be cases where the UK fails to comply with EU legislation?

The recent decision of the Employment Appeal Tribunal (EAT) Wood v Hertel (UK) Ltd & Fulton v Bear Scotland Ltd follows the European Court of Justice (ECJ) in Lock v British Gas on holiday pay. The concept that workers need holidays for their health and safety underpins everything in European law, but is it actually accepted in the UK?

Conflict began in 2001 when the BECTU case reached the ECJ. The UK right to holiday pay was dependent on 13 weeks’ service. This was struck down and the judgment made clear that the right to paid annual leave is an important principle of community social law.

Then followed rolled up holiday pay, most useful for bank or agency staff, who chose holiday pay as a lump sum bonus rather than taking it. RobinsonSteele made clear there had to be two parts to the right: being paid and being away from work.

That case was followed by decisions that:

• required untaken holiday to be carried over at the end of a year where it had not been taken because of illness;

• allowed the Pereda tow truck driver to cancel his planned holiday and take it as sick days;

• stated the retail staff in ANGED could replace their holiday, while on holiday, with sick leave, phoning in sick while on holiday and keeping the holiday.

On the plus side Neidel said the right to carry over holiday only applied to the 20 days required by the Working Time Directive, not the eight UK public holiday

BA flying staff in Williams pushed things further. BA holiday pay was basic pay only and the argument was around the “flying allowance”, paid when flying, and the time away from base payment. Although under a different directive, this opened the door to “normal pay and away”; the ECJ decided basic pay alone was insufficient.

Next was Lock v British Gas where the ECJ decided that the calculation of holiday pay should include commission, otherwise taking holiday might be disincentivised. Now we have overtime as Wood & Fulton decided workers are entitled to normal non-guaranteed overtime as part of their holiday pay, except for the 8 public holidays which can be basic only. In addition, travel time payments should also be reflected when calculating holiday pay. The EAT gave permission to appeal to the Court of Appeal. Who knows where we will go next? Bonuses?

An employer should take advice now; a continuing failure to pay the right amount of holiday pay means that an employee with, for example, five years’ service, could claim for the difference in holiday pay for the last five years. It may be worth simply breaking the chain for claims going back many years by paying the additional sum going forward. Thus, creating a break and starting the limitation period for such claims.