Unused Holiday on Dismissal

Under the Working Time Regulations 1998 (WTR), a worker cannot normally claim pay in lieu of any unused part of their statutory holiday entitlement. On dismissal, however, a worker is entitled to pay in lieu of holiday not taken. If an employer requires a worker to take holiday to which he or she is entitled, notice must be given before a period of at least twice as long as the number of days’ holiday to be taken (Regulation 15).

In Industrial & Commercial Maintenance Ltd. (ICM) v Briffa, Mr Briffa brought a claim for outstanding holiday pay. He had been given one week’s written notice of the termination of his employment and the letter instructed him that he was not required to work during the notice period. Instead, he was expected to use up his outstanding holiday entitlement of four days, in accordance with ICM’s contract terms, for which he would be paid.

ICM resisted the claim, relying on a written variation that had been made to its workers’ contractual terms of employment which stated that a worker who was given statutory notice who was not required to work during the notice period would be regarded as being on holiday during the period of notice.

The Employment Tribunal (ET) held that the term did not comply with Regulation 15 of the WTR as regards notice of leave to be taken. This required ICM to give Mr Briffa eight days’ notice. Since it had failed to do so, the company was in breach of Regulation 15 and Mr Briffa was entitled to four days’ outstanding holiday pay.

ICM appealed. The Employment Appeal Tribunal (EAT) found that the ET had failed to take into account that Regulation 15 of the WTR can be varied or excluded by a ‘relevant agreement’, such as a workforce agreement, an incorporated collective agreement or, as was the case here, by ‘any other agreement in writing which is legally enforceable as between the worker and his employer’. In the EAT’s judgment, the variation was a specific provision of Mr Briffa’s contract of employment and was legally enforceable. ICM was not therefore obliged to give the amount of notice laid down in Regulation 15.

The EAT issued a reminder that the purpose behind the WTR is ‘to ensure that workers take sufficient holiday with pay’, and this had been fulfilled in this case.

For advice on the legal considerations when changing or amending contract terms, contact:

Telephone: +44 (0) 1753 486 777 (Slough Office)
Telephone: +44 (0) 1189 596031 (Reading Office)