UK holiday rule unlawful says ECJ

In June 2001, the European Court of Justice upheld a trade union's legal challenge against the holiday entitlement provisions of the UK's working time Regulations.

UK legislation which provides that workers are entitled to paid annual leave only after 13 weeks' continuous employment with the same employer contravenes the EU working time Directive (93/104/EC), the European Court of Justice (ECJ) has found in a judgment issued on 26 June 2001 in the case of R v Secretary of State for Trade and Industry, ex parte Broadcasting, Entertainment, Cinematograph and Theatre Union (case C-173/99).

The Broadcasting, Entertainment, Cinematograph and Theatre Union (BECTU) began legal action against the holiday entitlement provisions of the UK's Working Time Regulations 1998 (UK9810154F) in December 1998 (UK9901176N). It said that many of its members were engaged on short-term contracts - frequently for less than 13 weeks - and that UK law deprived them of entitlement to paid annual leave, or an allowance in lieu at the end of the contract, even though the Directive conferred such a right on "every worker". BECTU contended that, although the Directive was to be applied "in accordance with the conditions for entitlement to, and granting of, such paid leave laid down by national legislation and/or practice" (Article 7(1)), this did not allow the approach taken by the UK Regulations which had the effect of entirely depriving certain classes of workers from the protection conferred by the Directive.

The High Court in the UK referred the issue to the ECJ for a preliminary ruling. In February 2001, Advocate General Antonio Tizzano issued his opinion on the case and supported the union's claim that current UK legislation is incompatible with the requirements of the EU working time Directive (UK0103118N).

The ECJ's ruling stated that paid annual leave of four weeks' duration is a social right directly conferred by the Directive on every worker as the minimum requirement necessary to ensure the protection of their health and safety. The ECJ pointed out that the Directive's provisions on paid annual leave do not give scope for any derogations, nor does the Directive draw any distinction between workers employed under a contract of indefinite duration and those employed under a fixed-term contract. While there is scope for Member States to organise the way in which the right to paid leave is exercised, the Directive precludes Member States from unilaterally restricting entitlement to paid leave. Moreover, rules such as those at issue in the UK legislation are liable to give rise to abuse because employers might be tempted to evade the obligation to grant the paid annual leave to which every worker is entitled by more frequent resort to short-term employment relationships.

On this basis, the ECJ ruled that Article 7(1) of the Directive "does not allow a Member State to adopt national rules under which a worker does not begin to accrue rights to paid annual leave until he [sic] has completed a minimum period of 13 weeks' uninterrupted employment with the same employer".

The Department of Trade and Industry immediately announced that it would be consulting on amendments to the Working Time Regulations to take account of the ECJ's judgment.

The Trades Union Congress welcomed the ECJ's ruling, and the government's "rapid recognition that this loophole must be closed". The Confederation of British Industry expressed disappointment with the ruling, saying "employers believe it is reasonable to have a qualification period before employees become entitled to holiday pay".