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Supreme Court confirms entitlement to annual leave can be satisfied by time off when not required to work (SC)

Meredith Hurst Friday, December 16, 2011

The Supreme Court has agreed with the decision of the Inner House of the Court of Session that entitlement to annual leave under the Working Time Regulations 1998, interpreted in the light of the Working Time Directive, can be satisfied during periods when workers are not otherwise required to work. Therefore, the employers in this case were entitled to insist that employees working on an offshore installation took their paid annual leave during so-called "field-breaks" spent onshore.

The decision will be of interest to employers and employees in other sectors, such as education and tourism, where annual leave is required to be taken during certain periods when no work is undertaken. (Russell and others v Transocean International Resources Limited and others [2011] UKSC 57.)

Background

The Working Time Regulations 1998 (SI 1998/1833) (WTR) implement the EC Working Time Directive 92/104/EC (now consolidated as the Working Time Directive 2003/88/EC (WTD)) in Great Britain. The WTD and the WTR contain provisions which lay down minimum health and safety requirements for the organisation of working time, with minimum rest periods consisting of daily rest, weekly rest and annual leave.

The WTR define working time as "a period during which a worker is working, at their employer's disposal and carrying out their activities or duties" (regulation 2(1), WTR).

A worker is entitled to four weeks' annual leave in each leave year (regulation 13(1), WTR, implementing Article 7 of the WTD). (There is also an entitlement to additional annual leave of 1.6 weeks, but this was not relevant at the time of the facts in this case (regulation 13A, WTR)).

A worker may take the leave to which he is entitled on such days as he may elect by giving notice to his employer, subject to any requirement imposed on him by his employer (regulation 15(1), WTR). An employer may require a worker to take leave, or not to take leave, on particular days, by giving notice to the worker (regulation 15(2), WTR). There is no requirement that such notices be given in writing or in any particular form.

From 1 August 2003, offshore workers have been covered by the WTD. In the case below, the Supreme Court considered whether time spent onshore, when offshore workers were not under an obligation to work, could constitute annual leave under the WTR.

Facts

The seven test-case employees all worked on offshore installations. Their cases were selected from a much larger number of complaints lodged with the employment tribunal. The seven were represented by two different unions, Unite and OILC. The employees worked for a number of different employers, but were represented by a single legal team. All but one worked on a platform or rig for two weeks, followed by two weeks onshore, as was customary in the offshore industry. Time spent onshore is known in the industry as a "field-break". When they worked offshore, the employees worked "12 hours on, 12 hours off".

Occasionally work-related activities took place during the employees' field-break weeks, such as training, appraisals, grievance and disciplinary hearings, medical assessments and offshore survival courses. However, it was accepted that time spent on these activities was minimal. Other than these commitments, the employees were free to do as they chose for a total of 26 field-break weeks every year. Working arrangements were described in their employment contracts, which either specified their working patterns or dealt explicitly with annual leave.

The employees asked to take annual leave during their offshore working periods but were refused. They all submitted claims to the Aberdeen employment tribunal which upheld their claims, holding that they were entitled to take their annual leave during offshore time. The employers appealed to the EAT, which upheld the appeal by a majority. It decided that time spent onshore during field-breaks was neither working time nor compensatory rest. It was a rest period, and time available for annual leave. It did not matter that the employees would not otherwise be working during those periods. The employees appealed to the Court of Session, which upheld the EAT's decision, finding that the employers' requirement that the employees take their annual leave during field-breaks fulfilled their obligations under the WTD and the WTR.

The employees appealed to the Supreme Court. They argued that:

  • "Annual leave", properly construed, meant a release from what would otherwise have been an obligation to work and was not just rest. As the periods onshore were not part of the employees' working time, they could not count towards their annual leave entitlement.

  • The right to paid annual leave had a qualitative dimension. Field-breaks did not have the quality that would enable any periods within them to be enjoyed as periods of annual leave.

  • Given that "annual leave" is not defined in Article 7 of the WTD, its meaning was open to reasonable doubt and so a reference to the ECJ was necessary.

The employers' case was that time spent onshore was in itself a rest period, as it was not working time. Furthermore, the time spent onshore was substantially more than the minimum four weeks' entitlement under the WTR and, therefore, there was no need for the employees to take annual leave out of the periods spent offshore.

Decision

The Supreme Court (Lord Hope giving the decision of the court) unanimously dismissed the appeal and refused the request to make a reference to the ECJ. It held that the employers were entitled under regulation 13 of the WTD, read in conformity with Article 7 of the WTD, to insist that the employees take their paid annual leave during periods when they were onshore on field-breaks.

 

Leave need not be taken in periods where employees are required to work

In considering the meaning of "annual leave", the court analysed the minimum rest periods under the WTD (and the WTR). It noted that rest breaks, daily rest periods and weekly rest periods must be measured separately from each other and cannot overlap. Where necessary because of special working patterns, workers must be afforded equivalent periods of compensatory rest. In the employees' case, it was agreed that the first two days of each period of their field-break was compensatory rest, to make up for the fact that they worked a 12-hour shift every day during their two weeks offshore.

With regard to the annual leave entitlement, neither the WTD nor the WTR define "leave". The Supreme Court stated that this did not mean that periods which were not working time could not constitute annual leave:

"[...] the ECJ has not said that a pre-ordained rest period, when a worker is free from all obligations to the employer, can never constitute annual leave within the meaning of that Article [7] [...] "rest period" simply means any period which is not working time. "Any period" includes every such period irrespective of where the worker is at that time and what he is doing, so long as it is a period when he is not working. (paragraph 36).

In the court's view, field-breaks plainly fell within the category of a rest period. Therefore, field breaks could be used to satisfy the employees' annual leave entitlement.

 

There is no qualitative requirement to annual leave

The court accepted that the purpose of the entitlement to annual leave was to enable workers to rest and enjoy a period of relaxation and leisure (as clarified by the ECJ in Merino-Gomez v Continental Industrias del Cauco SA [2005] ICR 1040, Stringer v Revenue and Customs [2009] IRLR 214 and Pereda v Madrid Movilidad SA [2009] IRLR 959 and that health and safety is at the heart of the WTD. However, there was "no indication that it [the WTD] was concerned about the quality of the minimum periods of rest, other than to make it clear in the definition of "rest period" that it means a period which is not working time" (paragraph 21).

Comment

As the Supreme Court refused to make a reference to the ECJ on the interpretation of annual leave under the WTD, this case should now be the last word on the question of whether an employer can designate non-working time as annual leave. The decision is not only of relevance to the oil and gas industry where shift patterns involving field-breaks are common. It also applies to other sectors where employees are required to take leave during periods when they are not required to work, such as teachers, professional footballers or those who work in the tourist industry.

Although not strictly relevant to the appeal, the court was asked to consider whether, carried to its extreme, its decision could result in employees being required to take their annual leave on Saturday (Sunday being treated as a weekly rest period). This would exhaust the possibility of there ever being whole weeks in the year when annual leave could be taken. Although the court did not reach a concluded view, it noted that a literal reading of an employer's rights under regulation 15(2) of the WTR (see Background) suggested that this might be possible. However, the EAT in Sumsion v BBC (Scotland) [2007] IRLR 678 had indicated that this would be an abuse of the system. The court noted that Article 7 of the WTD, when read together with Gomez, indicates that the entitlement to periods of annual leave is to be measured in weeks, not days. In the court's view, while employees can opt to take annual leave in days, employers cannot force them to do so. How does this suggestion sit with employers designating bank holidays as a single day's leave?

 

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