WORKING TIME : HOLIDAY PAY CANNOT BE INCLUDED IN HOURLY OR DAILY REMUNERATION.

The European Court of Justice published a further judgement on the Working Time Directive on 16 March, this time concerning holiday pay, which is likely once again to set the cat among the pigeons in the member states. The court has ruled that payment for annual leave included in hourly or daily remuneration is contrary to the Working Time Directive. Such a ( rolled-up holiday pay') system may lead to situations in which the minimum period of paid annual leave is replaced by an allowance in lieu.

min. 4 weeks of paid annual leave

According to the Working Time Directive, adopted in 1993, member states must take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.

Under the United Kingdom regulations which transposed the directive, any contractual remuneration paid to a worker in respect of a period of leave goes towards discharging any liability of the employer to make payments under the relevant regulation in respect of that period.

The European Court of Justice was asked for a preliminary ruling in a case brought by Robinson-Steele, Clarke, Caulfield, and Barnes, who work for various undertakings. For some, contracts stated that all payment for paid leave is included in daily rates of pay. For others, a collective agreement existed stating that holiday pay is integrated in hourly rates and that holidays are to be taken during rest periods under a system of rotation.

principle of annual paid leave

The court first recalls that the entitlement of every worker to paid annual leave is an important principle of EU social law from which there can be no derogation. Holiday pay is intended to enable the worker actually to take the leave to which he is entitled.

The court finds that the term paid annual leave' means that remuneration must be maintained for the duration of the leave within the meaning of the Directive and that workers must receive their normal remuneration for that period of rest. In...