Labour Employment Rights

Labour law also known as employment law deals with the body of laws, administrative rulings and precedents which addresses the legal rights of and restrictions on working people and their organizations¹. The direct function of labour law is that it deals with the rules governing employment relationship. Labour law functions through the role accorded by common law, legislation and is helped also by the extra legal sources such as the customs and collective bargaining. Labour law is divided in to two broad categories namely collective and individual labour law. Collective labour law deals with the relationship concerning employer, employee and the trade unions, however the individual labour law deals with the rights of employees contact and his rights at work.

One of the oldest modes which worked through in establishing a relationship between employer and employee was collective bargaining. Collective bargaining is the process of negotiation between an employer or employers and trade union. Collective bargaining produce agreed agreements which state the terms and conditions which would govern the employer and employee relationship. In Britain the legislation itself played a very limited role in determining the employment relationship hence extra legal sources such as collective bargaining had been utilized. As in 1954 Kahn-Freund stated that there had been no major country in the world in which law has played a less significant role regarding labour management relationship then in Britain². However during the periods of 1950s the state itself supported employment agreements through sources such as collective bargaining.

However due to this uncertainty created extra legal measures a need for a change was required to govern the process relating to the relationship of the employment contracts. Further as well with respect to paid annual laves there was no law which governed it however paid leaves were determined by individual employment contracts. First and initial steps regarding this issue was taken up by the European community in 1973 in which commission proposed to fix four weeks annual paid holidays. However a draft on reduction and reorganization of working time was presented by the commission to the council in 1983. However the draft failed to be approved as it required a unanimous vote and united kingdom disagreed with the proposal.

Further as well in 1988 the economic and social committee debated upon the rights which each and every member state should guarantee. Among these proposed rights were the right to paid annual leave which a worker must have in the member states. After further debate a 13 point draft was proposed in which it was also stated that every worker in the member state shall have a right for annual paid leave. But yet again United Kingdom was the only country which was against it. Hence an amendment to the draft was made and now an eleven point draft was presented by the commission in 1989 which also stated that every worker in the member state shall have a right to paid annual leave.

Pursuant to this the council adopted the working time directive in 1993 under the procedure listed under art 118(a) now art 137, which required a qualifying majority in the council. The Working time directive set to implement the health and safety measures with respect to paid annual holiday leave. Initially UK did not adopt the directive and it was followed with litigation to European Court of Justice. In United Kingdom v Council the ecj rejected united kingdoms argument over the validity of the directive and it was held that it be justified as a health and safety measure under art 118a and hence the procedure for qualified majority applied

However the working time directive had to be adopted by November 1999. Art 7 (1) of the directive stated that the “member state shall take measures to ensure that the worker is entitled to at least four weeks of annual paid holiday”. But even after losing the litigation process in 1996 the United Kingdom did not implement the directive until working time regulation 1998 came into force.

Regulation 13 of the working time regulation states that a worker is entitled to four weeks annual paid leave each year. So as the working time regulation came in implementation another issue arose that was of the delay in implementation of the directive by the united kingdom and hence the issue was weather it could be relied upon in between the intervening period. However the procedure of relying upon the directive is through the process of vertical direct effect and it could only be relied upon when the deadline for the implementation of directive has passed. This question was placed and answered in the case of Gibson v east riding of Yorkshire and it was stated that in order to be relied upon the directive has to be clear and precise. Hence it was held that art 7 of the directive was not clear and precise as it did not clearly state the length of time required for a worker to work in order to be eligible for the annual leave.

Further another issue which was brought up was the unauthorized deduction of wages by the employer. Sec 13 of the employment rights act 1996 states that claim for any unauthorized deduction by the employer can be made with in three months of the deduction and further sec 23(3) states that the time limit for three months starts from the last unauthorized deduction made. However in the case of list design group v Douglas and other a worker was allowed to bring claim for non payment of holiday pay by the employer over a two year period. It was stated that holiday pay due by the employer falls under the definition of wages according to sec 27 and failure to pay such pay would constitute unauthorized deduction of wages under sec 13. The approach adopted in List design was followed in Canada life v gray as well however then came about the case of Commissioners of inland revenue v Ainswroth in which it was held that list design and Canada life had been wrongly decided. In this case potential liability of employers was considered and it was held that claim for unauthorized deduction should be made with in three months so that employer’s do not face risk for a claim for an unduly long period.

The next issue arose was the interpretation of worker who is entitled for annual paid leave. This worker is defined in regulation 2 (1) “as an individual who has entered into or works under a contract of employment any other contract whether express or implied”. Hence in the case of Byrne brothers v Baird it was held by the employment tribunal that the concept of worker under the regulation is a broader concept and goes further then the concept of an employee. Hence carpenters and laborers in the case were held to fall with in the definition of worker. However art 1 (3) of the 1993 directive excluded air, road, sea, inland waterway, lake transport, sea fishing and doctors in training. The approach was adopted in the case of coleman and others v eddie stobart and held that employer’s business was road transport hence was excluded. The same approach was followed in the case of Bowden and others v tuffnells parcels. In June 2002 article 7 was extended to sea farers and then by time the ambit was more broadened as in the 2003 directive article 1{3} which states that “directive shall apply to all sectors of employment” Hence all category of workers except seafarers formerly excluded now fall with in the working time directive.

Further as per the general rule regarding the worker being eligible for annual paid leave would start at the start of work and he is entitled to take full four weeks of paid leave. However under the regulations in United Kingdom the right of a worker for leave did not arise until 13 weeks of continuous employment have elapsed. In the case of wellicome v Kelly services it was held that employment period prior to 1^st October 1998 would not count towards the 13weeks condition on the other hand in Stewart v Heron Recruitment it was stated that even if the period of employment is still unpaid it would count towards continuous employment as the contract of employment would still be existing. This inconsistency caused problems as workers who are unable to show a 13 week employment contract could not avail the opportunity of paid holiday leave.

Hence taking into account these issues regulations were challenged in the English court by Broadcasting Entertainment, Cinematography and Theater (BECTU). A reference to the ECJ was sent and it was held that a limitation of 13 weeks imposed by the regulation was contrary to the purpose of the Directive. Hence as a result of the decision by the ECJ United Kingdom removed the qualifying period requirement from the regulation.

Hence as an amendment by the United Kingdom after the decision by the ECJ in BECTU case was made many claims arose as per the rights which the workers had suffered at the time 13 weeks requirement was in place. Two cases arose vote force Associates v Quinn and South Tyneside MBC v Toulson in which the court followed Gibson and stated that article was not directly enforceable.

Another issue which arose regarding annual paid leave was whether sick leave and maternity leave count towards the paid annual leave or are separate from it. The issue as to whether workers can take annual leave while they are on sick leave was held to be possible in the case of kigass aero components v brown . However different approach was adopted in the case of Commisiioners of inland revenue v Ainsworth and the approach in kigass aera was rejected and it was held that worker on sick leave are not working hence are not entitled to take annual leave while on sick leave.

The next issue was whether annual would be acquired while on paternity leave. This issue was address in the case of Gomez v Continental Industries and the case was referred to the ECJ and it was held that paternity leave had no relation with annual leave. Hence worker is entitled to take annual leave other then the period of her maternity leave.

Another issue which is of importance is of rolled up holiday pay. In this procedure the employee and employer form an agreement and according to which the employer would pay the employee for the days he has worked and not for the leave days. This suits some employees as the employer increases the rate of hourly or daily pay more then normal pay hence if the employee does not take leave the whole year he can end up making more money. However regulation 13 (9) states that annual leave cannot be replaced by the payment.

In Miah v La Gondola the employer paid the employee an additional week pay in February 1999 instead of the weeks holiday. The worker when left the employment claimed for the payment of untaken holiday leave. The employment tribunal following regulation 13 (9) stated that the employer had to pay the worker for the untaken statutory leave. However a different scenario was adopted in the c ase of Tompkins v Kurn in which evidence was provided by the employer that the employee had agreed contractually for his rate of pay to be increased and not to be paid upon his leave days. However the employees claim for the payment of holidays was dismissed as the worker had agreed upon the stated terms. Hence both the above cases upon their own set of facts regarding their roll up holiday reached different conclusion. However this issue of roll up pay continued. As in the case of Blackburn v Gridquest the employers had paid workers for their holiday pay at their hourly rate but the workers complained that they had not received any pay for holidays. Hence it was held by the employment tribunal that the concept of rolled up holiday pay is contrary to the purpose of regulation 16 (1) and that “it is essential that the payment for annual leave should be made with the employer taking the leave”.

The issue of rolled up holiday pay was also taken up in Scottish court in the case of MPB Structure Limited v Munroe in which the issue arose was whether the eight percent increase in hourly rate of employees was valid as employees had agreed to it but it was held by the Scottish court that the main purpose of the working time regulation and the directive was to safeguard the health and safety of the workers and such measures by the employers would discourage the workers from taking leaves hence defeating the primary purpose of the directive and the working time regulation. Hence the agreement in this case between the employer and employee was held to be void as contrary to the working time regulation and directive. As Munroe was a Scottish case and could not bound English courts ( Caulfield v Marshalls ) but the English courts followed the principle laid down in Gridquest in McCarthy v Blue Sword as well holding that agreement regarding rolled up was not valid between employer and employee as a statutory right of leave could not be excluded.

As the claims regarding the rolled up pay issue were increasing the question again arose before the Leeds employment tribunal in the case of robinson-steele v RD Retail Services. The employment tribunal was of the view that the concept of rolled up pay limited the right of the employees to exercise their right of paid leave but the employment appeal tribunal also referred the case to the ECJ and asked whether the inclusion of holiday pay in hourly rate of pay was consistent with article 7 of the directive and an agreement between an employer and worker regarding the holiday pay be paid with the hourly rate of pay would be valid. The ecj in its reply held that a contractual agreement between employer and employee regarding rolled up holiday pay is not contrary to article 7 of the directive. Further the ECJ stated that in order for such an agreement to be valid both the parties must mutually agree to the terms. Further it was stated that the contract should be formed in such a manner that (a) the term regarding rolled up pay should be clearly incorporated into the contract (b) the amount of rolled up pay agreed should be clearly stated. Hence the ECJ laid down its final opinion regarding one of the most debatable issue regarding paid annual leave. The approach laid down by ECJ of a proper contract be constituted in order for rolled up pay to be valid was further followed by the English courts in the cases of Smith v AJ Morrisroes & Sons, Byrne v JJ Cafferkey & Co in which no evidence of mutual agreement was found hence the contract regarding roll up pay was held to be void but in the case of Wiggins v North Yorkshire County Council a proper contract of adding holiday pay into hourly rate of pay between a teacher and the council was found hence it was held valid.

Hence ECJ by laying down in the robinsion case has cleared many conflicting idea about the validity of rolled up pay. Hence now employers can validly excersice the rolled up pay procedure if they meet the contractual criteria laid down by ECJ.

Further on October 2007 The secretary of state of United Kingdom issued The Working Time(amendment) Regulation 2007. Regulation 13 of the working time regulation 1998 has been amended and the amendment of the working time amendment 2007 would be effective on 1^st October 2007. In this regulation the paid annual leave of the worker as per 1 st October 2007 has been increased by 0.8 weeks till 1^st April 2009. But after 1^st April 2009 the leave would further be increased by 0.8 weeks. However as the proportion of leave would be increased more in April 2009 this would cause some problem for the employers as they would have set an agreement with the workers upon 0.8 weeks of increment but by further 0.8 weeks of increment in the leave which would in total be 1.6 weeks would have to alter their contractual agreements with the workers. and hence in total the working time amendment regulation has increased the leave period by 1.6 weeks.

• Annual paid led ave (regulation 13 – 17)
• Problems and loop holes with the 1998 regulations
• How the courts dealt with loop holes mention ecj approach
• How the ECJ decision led to change in law in Uk
• Issues of buying out employment
• Issues of rolled up pay
• Issues of payment in lieu of paid annual leave