4. Rights to pay and conditions

National Minimum Wage

Under the National Minimum Wage Act 1998, UK workers have the right to a minimum wage, currently set at £6.08 an hour for those aged 21 or over (£6.19 from 1 October 2012). Young people aged 18 to 20 get a lower hourly rate of £4.98 (£4.98 from 1 October 2012 (no change)). Sixteen and 17-year-olds have a lower rate of £3.68 an hour (£3.68 from 1 October 2012 (no change)) and apprentices under the age of 19 or in the first year of their apprenticeship must be paid at least £2.60 an hour (£2.65 from 1 October 2012).

For an employer to be allowed to pay the lower "apprenticeship" rate, there must be a genuine apprenticeship agreement in place. In particular, training is the main purpose of an apprenticeship and working is secondary (see Chapter 2: Categories of worker - Apprenticeships).

An employer providing accommodation can count some of its value towards minimum pay - currently up to £4.73 per day or £33.11 per week (£4.82 per day and £33.74 per week from 1 October 2012). Guidance explaining the accommodation offset is available online at: www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_191033

Who is eligible for the minimum wage

Workers, including agency and homeworkers, are entitled to the minimum wage, as is anyone who works for another person, except those in the excluded sectors listed below. Workers on commission are entitled to the minimum wage. Interns may be entitled to the minimum wage, depending on how the employer treats them and what is expected of them (see Chapter 2: Categories of worker - Interns).

The NUJ is running a campaign called Cashback for Interns, supporting individuals who want to bring a claim to recover the minimum wage after working without pay. Details are available at: www.nuj.org.uk/innerPagenuj.html?docid=1754&string=interns

In 2010, the TUC launched an advice and campaigning website at: www.rightsforinterns.org.uk/

Any claim must be brought within three months of the last day of the internship.

Excluded workers

Some groups of worker are excluded from the right to the minimum wage. These include: the genuinely self-employed, share fishermen; genuine volunteers and voluntary workers with a contract to work for expenses only for a voluntary organisation; prisoners; work experience students (as long as it lasts less than a year); some government training programmes and pre-apprenticeship training courses; students on sandwich courses; members of the armed forces; and schoolchildren aged under 16.

How the minimum wage is calculated

There are different methods of calculating the hourly rate of pay for the purposes of the minimum wage, depending whether the worker is paid a salary, paid according to hours worked, paid according to output (piece work) or does unmeasured work (involving specific tasks but no set times).

Information about calculating the minimum wage is available at: www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_175105, and there is a minimum wage helpline (0800 917 2368).

The TUC also has a minimum wage calculator on its Worksmart website at: www.worksmart.org.uk/minwage_calc.php

Hours when a worker is available for work but not actually working can amount to working time for the purposes of the minimum wage, but the position is not always straightforward. The cases distinguish between workers who are "working" merely by being present at the employer's premises (e.g. a night watchman) where the worker's presence is a core part of the role (whether or not sleeping accommodation is provided), and workers who are given sleeping accommodation and are "on call".

A worker whose presence on site is a core part of the job is entitled to be paid for all the hours when s/he is required to be at the premises, because s/he is working throughout. For example, in Scottbridge Construction v Wright ([2003] IRLR 21), a night watchman was entitled to the minimum wage for the whole night shift, even though he could read, watch television or sleep when not on patrol. Similarly, in British Nursing Association v Inland Revenue ([2002] IRLR 480), workers working in their own homes during the night answering telephone enquiries had the right to be paid the minimum wage throughout their shift. It did not matter that they could do other things when not answering the phone, or that they might not get many calls.

By contrast, a worker given sleeping accommodation and expected to be on call is entitled to be paid the minimum wage for only those hours when s/he is "awake for the purpose of working" (regulations 15(1A) and 16(1A) of the National Minimum Wage Regulations).

It is a common mistake for workers "on call" during the night to confuse the requirements of the NMWR with those of the Working Time Regulations (see Chapter 4: Rights to pay and conditions - Working hours and breaks). Time spent on call but sleeping might well be "working time" for the purposes of the Working Time Directive, but this is a completely separate issue from the question whether wages must be paid for hours spent sleeping, for the purposes of a minimum wage claim (see South Manchester Abbeyfield v Hopkins [2011] ICR 254).

An employer is entitled to come to an agreement with a worker who does "unmeasured time", specifying the number of hours to be paid, taking into account the duties performed, as long as this is a "realistic average". In Walton v Independent Living Organisation Ltd ([2003] IRLR 469), the Court of Appeal held that a carer providing 24-hour cover did not have to be paid for all those hours. Although she had to be available for the whole 24-hour period, in practice she was only required to assist her client for around six-and-a-half hours a day, and an agreement to that effect had been made between them. The Court held that payment should be based on those hours.

A worker's basic pay must comply with the minimum wage. That basic pay may then be used to produce an "enhanced" rate for different shifts, for example "time-and-a-half". However, this "enhanced" rate cannot be used as a basis for working out whether the minimum wage is being paid, even if a worker never receives only basic pay and always receives the enhanced rate.

For example, in Hamilton House Medical Ltd v Hillier (UKEAT/0246/09), Ms Hillier worked as a care worker. Her basic pay rate was below the minimum wage. However, she was paid "time-and-a-third" for weekday nights and "time-and-two-thirds" for weekend nights. As she almost always worked nights, her average hourly pay was above the minimum wage. Even so, since her basic rate of pay was below the minimum wage, the regulations had been breached.

Following a successful union and media campaign, restaurant and bar employers are no longer able to make up their pay to the minimum wage using customers' tips (regulation 5, National Minimum Wage 1999 (Amendment) Regulations 2009).

Workers working at home and paid according to what they produce (piece workers) have the right to a minimum fair piece rate of 120% of the national minimum wage. Guidance on calculating the minimum wage for output based piece workers can be found at: www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_175097

Bringing a claim for the minimum wage

The law requires employers to keep adequate records showing they are paying the minimum wage and a worker is entitled to inspect his or her individual record. In any tribunal claim, the onus is on the employer to prove that the minimum wage has been paid. Workers can contact the confidential Pay and Work Rights Helpline (0800 917 2368) who offer help recovering arrears of the minimum wage.

HM Revenue and Customs can bring a claim on behalf of a worker in the employment tribunal or the civil courts to recover minimum wage arrears. Alternatively, the worker can bring a claim for unlawful deduction from wages (see Deductions and underpayments). A claim in the employment tribunal must be brought within three months of the most recent failure to pay the minimum wage. Unlike a claim for breach of contract (see Chapter 3: Contract breach) a claim for unlawful deduction of wages can be brought in the employment tribunal while the worker is still employed.

A worker can also claim if the employer unilaterally reduces working hours to keep wages at what they were before a new minimum wage rate came into force.

Any attempt to contract out of the minimum wage is void (section 49 NMWA). This means that any contract term, for example, to repay training fees, is void to the extent that it would reduce wages to below the level of the minimum wage.

If an employer increases the productivity target to fund an increase in the minimum wage and an employee who is unable or unwilling to meet the new target is dismissed as a result, that dismissal is likely to be automatically unfair (Bopari v Grasshopper EAT/284/01) (see Chapter 10: Automatically unfair dismissals). If an employer reduces an existing bonus or attendance payment to fund an increase in the minimum wage, this is likely to be an unlawful deduction from wages (Laird v Stoddart IRLR 591 EAT; Aviation & Airport Services Ltd v Bellfield EAT/194/00) (see Deductions and underpayments).

Pay slips and pay intervals

Every employee must be given, by their first pay date, an itemised pay statement listing gross wages, deductions and net wages (section 8, Employment Rights Act 1996 (ERA 96)). If an employer fails to give a statement, an employee can go to a tribunal to get it.

If employees are currently paid in cash, this should remain as part of their contractual rights, and the usual rules for contract changes apply (see Chapter 3: Contract changes).

Employers must each year give every employee a certificate (P60) showing annual gross pay, take-home pay and total deductions.

Fixed deductions from pay do not need to be itemised separately on each pay statement as long as the total amount of fixed deductions is given and the employer has previously given the employee a statement detailing those deductions (section 9, ERA 96).

Deductions and underpayments

An employer is only entitled to make deductions from a worker's pay if:

• the employer has a statutory duty or authority to do so (for example, income tax and National Insurance contributions);

• a term in the contract allows them to do so and they have notified the worker in writing; or

• they have the written consent of the worker, which must have been given before the deduction is made (section 13, ERA 96).

A signed authorisation form for union subscriptions will amount to written consent, so this would be a lawful deduction.

If an employer deducts pay without consent, the worker can bring a claim for unlawful deduction from wages in an employment tribunal (unless it is an overpayment or other exception discussed below). This includes shortfalls in wages and late payment. If a worker does not receive the total amount of wages owed to them on any occasion, this will be an unlawful deduction.

However, if the real issue is whether the worker is contractually entitled to the payment at all, the Court of Appeal has held that the worker should bring a claim for breach of contract and not a claim for unlawful deduction of wages (Coors Brewers Ltd v Adcock & others [2007] EWCA Civ 19). In practice, it may be appropriate to claim under both headings, and to let the tribunal decide. However, note that a claim for breach of contract can only be brought in the employment tribunal once the employment has ended (see Chapter 3: Other remedies). While still employed, a claim for breach of the employment contract can only be brought in the civil courts.

Note also that if you bring a contract claim in the employment tribunal, the employer may counter-claim for breach of contract, for any amounts it claims are owed by you. By contrast, if you limit your claim to a statutory claim for the unlawful deduction of wages, your employer will not be allowed to introduce a counter-claim into your employment tribunal proceedings.

A claim for unlawful deduction from wages must be made within three months of the date the last payment should have been made or, if there is a series of deductions (for example, a month-on-month failure to pay the minimum wage), within three months of the last in the series.

Wages include fees, shift allowance, bonuses, commission, holiday pay, guarantee pay, sick pay and maternity pay. But notice pay cannot be claimed as an unlawful deduction, unless the notice has been worked and the wages remain unpaid. If an employer ends the contract without notice or notice pay, the correct course is to claim the equivalent of the notice pay as damages for wrongful dismissal in breach of the employment contract (Delaney v Staples [1992] IRLR 191).

Even where an employee has breached the employment contract (for example, by leaving without giving enough contractual notice), there is no automatic right to deduct pay. Any deductions made without authority from a final pay packet are unlawful. That authority can be contained in a term of the employment contract, or previously agreed by the worker in writing. Either way, the agreement must be before the deduction is made.

Deducting money from an employee's final pay packet because they have taken more holiday than they have accrued is an unlawful deduction from wages unless there is a written agreement that allows the employer to do this (usually a term of the employment contract).

Part II of the ERA 96 can be used to challenge unilateral contract changes that result in a reduction in pay. For example, in Kerr v Sweater Shop ([1996] IRLR 424), the EAT held that a change in the calculation of holiday pay, communicated to workers by way of a general notice only, did not comply with the law. The resulting pay reduction was therefore unlawful. Similarly, in International Packaging Corporation v Balfour ([2003] IRLR 11), a unilateral cut in working hours led to an unlawful deduction. In Bruce v Wiggins Teape ([1994] IRLR 536), the law was used to reinstate an overtime rate that the employer had scrapped unilaterally. And in Saavedra v Aceground ([1995] IRLR 198) the ERA 96 was used to reclaim a share of tips that the employer had unilaterally reduced. See also the discussion of Rigby v Ferodo [1987] IRLR 515 in Chapter 3: Breach of contract.

Where the employer has a contractual right to impose a particular change, the resulting deduction is likely to be lawful. In Hussman Manufacturing v Weir ([1998] IRLR 288), the employee's shift was changed and as a result his pay was reduced. His claim that this was an unlawful deduction failed because the employer could point to a contract term entitling it to make shift changes. This is because under Part II ERA 96, a deduction can be made where it has been authorised in advance by a "relevant provision in the contract". (See also Bateman v Asda (UKEAT/0221/09), discussed in Chapter 3: Contract changes). Remember that for any contract term to be enforceable, the usual rules apply. These are set out in Chapter 3.

Deductions for other reasons, including dishonesty, poor work or misconduct, can also only be made if the worker has agreed in advance in writing to the deduction. But the agreement must be specific and clear and must have been made before any incident giving rise to a deduction.

Overpayments and other exceptions

A worker cannot bring a claim for unlawful deduction from wages in the employment tribunal if the reason for the deduction is that the employer has made an overpayment (section 14, ERA 96). This is the case even if the error is because the employer had wrongly calculated the amount due.

However, if there is a dispute and the worker genuinely believes s/he has not been overpaid, a tribunal can decide as a matter of fact whether or not there had been an "overpayment" which must be repaid.

Often, a worker accepts that s/he has been overpaid once it is brought to their attention, but has spent all the money and cannot repay it. The law in this area is complex, but in summary, it would be for the employer to bring a claim to recover the money in the civil courts. The worker might succeed by showing, for example, that he/she had not realised there had been a mistake and had changed position in reliance on the money believing it was his/hers, spending it or taking on extra liabilities such as a mortgage on the basis of the money. In Commerzbank v Price-Jones [2003] EWCA Civ 1663, the Court of Appeal held that an overpayment which was clearly a mistake on the employer's part could be reclaimed, unless the employee could show that it would be inequitable for them to have to repay it.

Workers in retail employment have additional protection limiting deductions for cash shortages or stock deficiencies to a maximum of 10% of any one pay packet, except for the final one.

Deductions that are made because a worker has taken part in a strike or other industrial action short of a strike are excluded by section 14 of the ERA 96, and cannot be pursued as an unlawful deduction from wages claim in an employment tribunal. However, the tribunal can consider whether there was in fact industrial action (Gill v Ford Motor Co ([2004] IRLR 840). If the worker wants to challenge the amount of pay deducted, this must be done using the civil courts.

Guarantee pay

Employees laid off or on short time working should receive their normal pay (Miller v Hamworthy Engineering [1986] IRLR 461) unless there is a clear contractual term to the contrary. The contract term can be express or implied. An implied term can arise through conduct, custom or practice, but it must be clear (see Chapter 3: Work rules and collective agreements).

If the contract gives the employer the right to lay off workers or to put them on short-time working, they must be paid at least statutory guarantee pay, as long as they have been working for the employer for at least a month. This is the case even if the contract gives the right to lay off workers without pay.

An employer can agree to pay contractual guarantee pay that is better but not worse than statutory guarantee pay.

The rules on statutory guarantee pay are found in section 28 of the ERA 96. Statutory guarantee pay is calculated based on normal hourly earnings, and limited to a maximum of five days' pay in any three-month period.

The maximum paid for a day is £23.50 (2012-13) (section 31, ERA 96). Employees laid off because of industrial action taken by any employees against the employer or an associated employer do not qualify for guarantee pay.

Employees who refuse an offer of suitable alternative work for the days they are laid off will lose their right to guarantee pay. If employees are denied guarantee pay in circumstances where they believe they have an entitlement, they can make a claim to a tribunal within three months of the day payment is claimed for (section 34, ERA 96).

Employees with at least two years' service who are laid off for a period of at least four consecutive weeks (or six non-consecutive weeks in a 13-week period) may be able to claim a redundancy payment (section 148, ERA 96).

Medical suspension pay

Employees suspended by their employer on medical grounds because of a statutory requirement are entitled to medical suspension pay (section 64, ERA 96). This applies where there is a potential danger to a worker's health, for example, from lead, rubber, chemicals or radioactive substances.

The same requirements, exclusions and obligations to accept suitable alternative work apply as for guarantee pay (see above). However, payment is based on the statutory "week's pay" calculation (see Chapter 10: Compensation) and is currently set at a maximum of £430 per week (2012-13).

Contractual earnings are offset against this and the maximum period of entitlement is 26 weeks. Employees who have been refused medical suspension pay must lodge their claim with the tribunal within three months (section 70, ERA 96).

A worker may also be entitled to a medical suspension relating to pregnancy or childbirth (Management of Health and Safety at Work (Amendment) Regulations 1999).

Working hours and breaks

The Working Time Regulations 1998 (as amended) limit the length of the working day and the working week. The regulations cover "workers" and not just "employees" (see Chapter 2: Categories of worker) and state that, in general, a worker should work no more than 48 hours in a week, averaged over what is called a "reference period". This is normally 17 weeks, but is 26 weeks in the "special cases" listed in regulation 21. These include, for example, those working in security and surveillance, care services and at docks and airports. The reference period can be extended to 52 weeks by collective or workforce agreement only. Employers cannot force workers to work more than these hours (Barber v RJB Mining [1999] IRLR 308).

The regulations do not apply to senior managers and others whose working time is not predetermined and who can exercise control over it. Transport sector workers and junior doctors, who were initially excluded, are now covered by the regulations.

Opting out of the 48-hour week

The regulations allow individuals to opt out of the 48-hour limit. Any opt-out agreement must be entirely voluntary and must be in writing. The employer must keep records of any employees who opt out. An opt-out cannot be agreed through a collective agreement. Instead, each worker must freely agree to any opt-out with full knowledge of the facts. Workers can opt back in at any time by giving notice of not less than seven days and not more than three months, depending on what their contract says. As part of its "It's about time" campaign against long hours, the TUC provides a model letter for workers to use to opt back in to the 48 hour week. It is available at: www.tuc.org.uk/tuc/optout.pdf.

An individual who refuses to opt out cannot be treated less favourably as a result of that decision. A worker who suffers a detriment (for example, being refused a promotion or a pay-rise) for refusing to opt out can bring a claim in an employment tribunal. What amounts to a "detriment" for this purpose was examined in this recent case:

Time on call

Working hours can include time on call, provided the employee has to remain on the employer's premises even when not doing any work. Only "on call" hours where the worker is not required on the premises are not counted for the purpose of calculating working time. In Sindicato de Medicos v Consumo de la Generalidad Valenciana ([2000] IRLR 845), doctors on call at a health centre were not allowed to leave the premises although they could read, watch TV, eat or sleep. The ECJ held that this time was all working time. The decision was followed in Landeshauptstadt Kiel v Jaeger ([2003] IRLR 804), in which a doctor was required to remain at hospital while on call but could sleep in a hospital room and rarely spent more than half of his on-call time working. Nevertheless, it all counted as working time. This meant that the doctor had the right to compensatory periods of time off immediately after the period he had been on call.

The principle was also applied in the UK in the case of Anderson v Jarvis Hotels plc (EAT/0062/05). In this case, a hotel worker required to sleep over was found to be working for the whole of that time, even when he was asleep. The EAT said it was clear his employer required him to be there. He had been disciplined on one occasion for leaving the hotel for half an hour in the early hours of the morning.

The European Commission has been consulting for some time on proposals to amend the laws on on call time and compensatory rest.

Nightworkers

There are separate rules covering night workers (those working at least three hours between 11pm and 6am). In general, a worker should not work more than eight hours a night, when averaged over four months. Employers have to provide free health assessments for night workers.

Rest breaks

The regulations also entitle workers to an uninterrupted rest break of at least 20 minutes if the working day is more than six hours. There is no statutory right to a second 20-minute break after twelve hours (The Corps of Commissionaires Management v Hughes UKEAT/0196/08/CEA).

This rest break does not have to be paid. The regulations state that breaks can be deferred and compensated later where "the worker's activities involve the need for continuity of service". However, employers cannot under-staff to avoid giving workers breaks.

Under regulation 8 of the WTR 98, where work is monotonous or the work-rate is predetermined, the employer is under an obligation to ensure that workers receive adequate rest breaks. These are in addition to the 20-minute rest break referred to above.

Workers are also entitled to a daily rest break of at least 11 consecutive hours and a weekly rest of not less than 24 hours, which can be averaged over two weeks. Young workers have additional protection (see Chapter 2: Young workers).

Under the Sunday Trading Act 1994, shopworkers who were in employment prior to 24 August 1994 and were not Sunday workers, or who have given their employers a written opt-out notice saying they do not wish to work on Sundays, are "protected shopworkers" and do not have to work on Sundays.

There may also be situations where a requirement to work at particular times is against the law on religion or belief grounds (see Chapter 6: Discrimination).

Employers are also bound by an implied contractual duty not to require that employees work such long hours that could result in damage to their health (Johnstone v Bloomsbury Health Authority [1991] IRLR 118).

It is automatically unfair to dismiss an employee for asserting a statutory right such as the right to a rest break under the Working Time Regulations (see Chapter 10: Automatically unfair dismissal). The limits of this protection are illlustrated by the following case:

In Hone v Six Continents Retail Ltd ([2006] IRLR 49), the Court of Appeal found that the fact a worker regularly worked over 48-hours a week was relevant evidence in a work-related stress claim. The resulting personal injury suffered by Mr Hone was reasonably foreseeable and his claim for compensation succeeded.

More information on the treatment of working time for different workforce groups can be found in LRD's annual publication Health and safety law.

Holidays

All workers have the right to a minimum of 5.6 weeks' paid holiday a year (equivalent to 28 days for someone who works a five-day week) under the Working Time Regulations (WTR), as amended. This entitlement was increased from four to 4.8 weeks in October 2007 and from 4.8 to 5.6 weeks in April 2009 as a result of union campaigning. This means that four weeks of the holiday entitlement are based on European law, whereas the extra 1.6 weeks are based on UK legislation. The government has been consulting (as part of its Modern Workplaces consultation) on allowing employees and employers the possibility of agreeing to "buy out" the extra leave that goes beyond the requirements of the Directive.

The Department for Business, Innovation and Skills (BIS) has produced guidance and a ready reckoner for calculating holiday entitlement at: www.direct.gov.uk/en/Employment/Employees/Timeoffandholidays/index.htm

The right to paid annual leave is available to all workers and not just employees (see Chapter 2: Categories of worker). Under the statutory scheme, holidays must be taken in the year in which they accrue unless the employment contract allows for untaken leave to be carried forward into the next holiday year. The position is more complicated where a worker has been unable to take holiday due to sickness absence (see Holidays and sickness absence).

The right to paid holidays is an important EU social law from which there can be "no derogation" (KHS AG v Winfried Schulte Case C-214/10). In other words, national law is not allowed to cut down the statutory right to take holiday, or make it too difficult for the worker to enforce the right in a tribunal. The basis of the right is that the workers' health and safety must be protected through adequate rest.

Because the right to paid annual leave is intended to protect workers' health and safety, a worker is not allowed to be paid in lieu of taking statutoryholidays, except where the employment has ended and s/he has not taken all the holidays that have built up. The right to be paid for unused holiday outstanding at the end of the employment is absolute, and any clause in a contract that seeks to deny it is void (Witley & District Men's Club v Mackay EAT/151/00 [2001] IRLR 595).

A worker is only entitled to be paid in lieu of unused contractual (as opposed to statutory) holiday entitlement if the contract allows for this. Normally this will take the form of an express contractual term, but in some circumstances the tribunal may imply a term (Janes Solicitors v Lamb Simpson EAT/323/94).

Although the health and safety purpose of statutory holiday is to take rest, (Pereda v Madrid Movilidad SA [2009] IRLR 959), the EAT has recently confirmed that the Working Time Directive is not concerned with the "quality" of rest periods. "‘Rest period' simply means any period which is not working time" (Russell v Transocean International Resources Limited [2011] UKSC 57).

Pay during holidays is calculated in the same way as a normal week's pay (sections 221 to 224 of the ERA 96).

Overtime pay is only included in the calculation if the employer is contractually obliged to provide it (Bamsey v Albion Engineering ([2004] IRLR 457)). The same normally applies to commission payments, with statutory holiday pay entitlement based on basic pay only. Where pay depends on output (for example, where there is a variable contractual bonus linked to productivity), holiday pay should be calculated taking the bonus into account (averaging the pay over the preceding 12-week period) (May Gurney v Adshead & 95 others EAT/0150/06).

The rules on calculating holiday pay were recently thrown into some doubt by the following ECJ case supported by pilots union BALPA:

Holiday rights accrue on a monthly basis. In the first year, a worker is entitled to a twelfth of the statutory annual leave entitlement for every month worked. The amount of time that can be taken at any one time within the first year of work can be rounded up to the nearest half a day. For example, someone working five days a week who has worked for two months would be entitled to take three-and-a-third days, and so could take three-and-a-half days' leave.

Under the statutory scheme, workers wanting to take leave must give notice of at least twice the length of the holiday requested. This requirement can be varied by the terms of an employment contract or collective agreement, but the conditions imposed by the employer for taking leave must not be "unreasonable, arbitrary or capricious" (Lyons v Mitie Security UKEAT/0081/09).

The employer is allowed to ask for the leave to be deferred, provided it tells the employee in advance, giving notice which is at least as long as the leave requested. Shorter notice can be given where there is a "relevant agreement". A term in the employment contract entitling the employer to require the employee to take holiday during his notice period can be a "relevant agreement" for this purpose (Industry & Commerce Maintenance v Briffa UKEAT/0215/08/CEA).

It is unlawful to pay holiday pay as part of the hourly rate of pay. The practice, known as rolled-up holiday pay, breaches the Working Time Directive which requires that workers are paid for their holiday at the time that they take it (Robinson-Steele v RD Retail Services Ltd, Clarke v Frank Staddon Ltd and Caulfield & others v Hanson Clay Products Ltd (formerly Marshalls Clay) C-131/04 and C257/04 ([2006] IRLR 386)).

However, confusingly, these same cases confirm that as long as a worker (typically an agency worker) is told clearly, fully and transparently which part of any pay packet is intended to represent "holiday pay", the employer will be allowed to set off any sums paid as holiday pay against that worker's claim for holiday pay. In other words, where an employer has made clearly identifiable payments on account of holiday pay, a tribunal is likely to conclude that a technical breach of the WTR has not resulted in any loss to the worker.

Even so, in 2010, BIS changed the guidance on its website which now states that rolled-up holiday pay is unlawful and that employers must always pay their workers their normal wages while they are actually taking their annual leave.

In Leisure Leagues v Maconnachie EAT/940/01 [2002] IRLR 600, the EAT held that the amount of a day's holiday pay should be calculated by dividing the annual salary by the number of days actually worked (in that case, 233) rather than by 365, which was the previous practice. This was to take into account good industrial practice and the introduction of the Working Time Regulations. This was confirmed by the EAT in the case of Yarrow v Edwards Chartered Accountants UKEAT/0116/07.

If an employer refuses to pay for statutory holidays, a worker can bring a claim in an employment tribunal. A worker can choose between bringing a claim for breach of the WTR or claiming outstanding holiday pay as an unlawful deduction from wages (HM Revenue and Customs v Stringer and others [2009] UKHL 31/ [2009] IRLR 677).

The advantage of a claim for unlawful deduction from wages is that a continuing series of deductions need only be the subject of one claim (rather than a claim for each time pay was docked).

Holidays and sickness absence

There has been a series of recent decisions by the European Court of Justice (ECJ) about the relationship between the WTRs and sickness absence. There has also been a government consultation on changing the WTRs to accommodate these cases, known as the Modern Workplaces consultation. Consultation has closed, but the government's response has not yet been published .

ECJ case law has established that a worker continues to build up annual leave while off sick, and can choose between taking paid holiday while off sick and saving it up to take when he returns to work (HM Revenue and Customs v Stringer and others [2009] IRLR 677). Taking holiday while off sick might be a good option when the worker's entitlement to contractual sick pay at full pay has run out.

The Stringer case also confirms that a worker who has not had the opportunity to use up his or her statutory holiday during the holiday year because of sickness must be allowed to carry that unused holiday forward into the next holiday year, even if the employment contract expressly forbids this. This needs a change to the WTRs which currently ban any carrying forward of holiday. Public sector workers can already rely on the Directive itself as it has direct effect. In other words, it can be enforced directly against public bodies, regardless of national laws (Dominguez v Centre Informatique du Centre Quest Atlantique (C-282/10)).

Although a worker who has not been able to take his leave because of sickness must be allowed to carry it forward into the next holiday year, this right is not without limits. The ECJ has recently confirmed that "unused holiday cannot be allowed to build up indefinitely" because "otherwise, the leave would lose its main purpose as a "rest period", and instead become "merely a period of relaxation and leisure". It would also prejudice the employer, who would be storing up a liability to pay for large amounts of unused leave if the employment eventually ends due to sickness absence, and may also face difficulties organising work to manage the absence (KHS AG v Winfried Schulte Case C-214/10).

Collective agreements and national laws can agree a cut off point for any carry forward of annual leave, but that cut off point must not be too short. As a guide, in Schultz-Hoff v Deutsche Rentenversicherung Bund (C350/06), a carry-over period limited to six months was held to be too short, whereas the 15-month cut off point in Winifried Schulte was considered to be acceptable.

The government wants employers to be able to insist that leave unused due to sickness absence is taken during the current holiday year if there is still time left in which to take it. It also wants to give employers the right to require that leave to be carried forward into the following year if there are good business reasons for this.

The law is unclear as to whether workers must ask to take their holiday while on sick leave in order to be paid for it. There is no need to ask, according to the EAT in NHS Leeds v Larner (UKEAT/0088/11/CEA) but confusingly, the EAT suggested the opposite in Fraser v Southwest London St George's Mental Health Trust ([2011] UKEAT 0456/100311).

The Trust in Larner is taking its case to the Court of Appeal, which will eventually clear up the position. The best practical advice for reps in the meantime is to encourage workers to liaise with the employer, their GP and any occupational health provider to reach agreement to use up outstanding annual leave in the most sensible way, for example by taking some paid holiday while off sick, or by taking the leave on returning to work as part of a staggered return-to-work programme.

Holiday taken during sickness absence should be paid at the normal rate of pay, even if all rights to contractual and statutory sick pay have been exhausted.

Falling ill while on holiday

A worker who falls ill either while on holiday (or before starting a pre-booked holiday) is entitled to take the leave again at a later date, if necessary during the next leave year. An employer is entitled to refuse particular holiday dates, but must allow the worker to carry forward the annual leave if it is not possible to accommodate the request.

In Pereda v Madrid Movilidad SA (C-277/08) [2009] IRLR 959, an accident at work meant that Mr Pereda was ill for all but two days of his one month summer holiday. When his employer refused to let him re-book that holiday to take later in the year, he brought a claim.

The basis of the ECJ's decision is that the purpose of sick leave (recovering from being ill) is different from that of annual leave (enjoying rest). Pereda also established that a worker can choose to take paid annual leave while off sick but cannot be compelled to do this. Taking annual leave while off sick might be a good idea if a worker has used up the whole of his or her entitlement to full pay sick pay.

The coalition government's consultation Modern workplaces includes proposals to amend the Working Time Regulations in response to the Pereda judgment.

An employee who falls ill on holiday is entitled to normal contractual sick pay. As regards SSP, the SSP rules under the Social Security Contributions and Benefits Act 1992 say that sickness during a holiday (unless the employee falls ill outside the European Union) qualifies for SSP as long as the employee has the required medical certificate (see Chapter 10: Dismissal).

Bank holidays

There is no statutory right to bank holidays. Any entitlement to bank holidays is purely contractual: either through an express contractual term or through an implied term based on conduct or custom and practice (See Chapter 3: Implied terms).

In Campbell & Smith Construction v Greenwood [2001] IRLR 588, the EAT held that the government's announcement that there would an additional day's public holiday to mark the Millennium did not entitle employees to an extra day's paid holiday.

Bank holidays can be included within the minimum 5.6 weeks of statutory holiday entitlement. Whether or not they are included will depend on the terms of the employment contract.

Time off for public duties

Employees who hold certain public offices have the right to a "reasonable" amount of time off to perform their duties under section 50 of the ERA 96. This could include acting as a magistrate, local councillor or member of a tribunal, or serving on an NHS trust, school governing body, police authority, environmental agency or board of prison visitors.

In deciding what is reasonable time off, the employer can take account of the effect the time off will have on the business, how much time off is required and how much has already been taken.

In Riley-Williams v Argos (EAT/811/02), the EAT held that reasonable time off was the amount of time needed to meet the requirements of the office. In that case, the employee had been appointed as a magistrate and her letter of appointment said that she would have to serve a minimum of 26 half-day sessions a year. The EAT said a reasonable employer would allow that amount.

An employee has the right not to be dismissed or to suffer any other detriment because they have been summoned or are absent from work on jury service (section 43M, ERA 96).

There is no statutory right to be paid for the time off, although the employee's contract may provide for payment.

An employee who has been refused the right to time off in respect of any of the above functions can make a complaint to a tribunal within three months.

Time off for study or training

Since 6 April 2009, individuals working in organisations with 250 employees or more have a statutory right to request time off for study or training. This right was due to be extended to all employees, irrespective of the size of the organisation for which they work in April 2010, but has been postponed by the government.

Employees working in organisations employing 250 employees or over can make a request if they have worked for the employer continuously for six months and are over 18. Those aged 16-18 have a separate right to time off for study or training. However, an employee whose application is rejected must wait up to 12 months before submitting a fresh statutory request for time off to study or train.

The procedure for the making and handling of a request for time off is governed by the Employee Study and Training (Procedural Requirements) Regulations 2010. Essentially the employee must write to the employer stating that s/he is applying under section 63D Employment Rights Act 1996 to take time off to study or train; and explain:

• what the study or training is;

• where and when it will take place;

• who will provide or supervise it; and

• what qualification it will lead to and how it will improve the employee's effectiveness at work and the performance of the employer's business.

Within 28 days of receiving the request, the employer must hold a meeting with the individual. The employee has the right to bring a workplace companion, who is entitled to paid time off to attend. The employer must discuss the request with the individual and seriously consider it. The employer can turn down the request, but only for one of a handful of specified reasons, namely;

• the training would not improve the employee's effectiveness in, or the performance of, the employer's business;

• costs to the employer;

• detrimental impact on quality, performance or ability to meet customer demand;

• inability to reorganise work among existing staff or to recruit extra staff;

• reduced workload in the periods when the employee is still available; and

• a planned reorganisation.

If the employee is dissatisfied with the employer's decision (which s/he must receive within 14 days of the hearing) s/he can appeal. The employer has 14 days from the appeal meeting to give its decision.

A successful tribunal claim for breach of these regulations, can lead to an award of up to eight weeks' pay. Pay is capped at a maximum, currently £430 a week.

Other statutory rights to time off are explained in the following chapters: trade union duties and activities and employee representatives - Chapter 5; antenatal care, family emergencies, parental and maternity leave - Chapter 8; alternative work in a redundancy situation - Chapter 11.