Christine:  Seamus, Working Time Regulations, holiday pay, help us solve all our problems on that. Where do you start?

Seamus:  Well, I suppose the interesting point about this was that I don't think any of us were aware that these amendments were planned or that they were going to come in. They seemed to have been very much brought in on a very quick step. But there is a reason as to why that has happened.

Ultimately, whenever we come to Working Time Regulations, we'll all be pretty familiar, or we should be pretty much familiar with the Working Time Regulations (Northern Ireland) 2016.

So there are 2016 regulations here specifically for Northern Ireland, and they implement the Working Time Directive from Europe. And the aim of the directive, just to give a bit of background to it, was to ensure that workers themselves were protected against those adverse effects on their health and safety caused by working excessive hours or having inadequate rest breaks or disruptive work patterns.

So that's where we get our information and our guidance in relation to holidays, but it also covers things off in relation to a maximum 48-hour working week over the reference period, which we'll probably have to get into as well, that word reference period; a daily rest period of 11 consecutive hours in the day; and rest breaks where the working day is longer than six hours, which is your breaks that you get during the day that you have a legal entitlement to.

Also, your statutory right to 5.6 weeks' pay annual leave. We'll talk about that. And then sort of those more intricate things, like the health assessment for workers and young people and things like that.

But what we had come in . . . and I think that the legislation sort of was made known on 21 December, just at the end of last year. The legislation is known as the Working Time (Amendment) Regulations (Northern Ireland) 2023.

The aim of the regulations really was to ensure that those EU-derived rights relating to annual leave and employment pay were maintained, and that was because we had the Retained EU Law (Revocation and Reform) Act 2023, which was coming into effect on 1 January.

So we've had these amendments that have been made to the Working Time Regulations that have also come in on 1 January, and the purpose of that has been to protect and ensure that the regulations are protected in relation to that.

Also, they do some things as well. So what we can say generally, and I'll maybe go into further detail on each one, but in general, you have the right to carry over annual leave where you haven't been able to take it due to being on sick leave, maternity leave, parental leave, whatever it is. So it covers off issues in relation to carryover of annual leave.

It also doesn't just relate to if you've been sick or for family reasons. It also covers the position where your employer has failed to inform you of your right to paid annual leave or enabled you to take it.

Christine:  That's pretty significant

Seamus:  Absolutely. What that does, and I suppose this is the important point for anyone listening into the webinar today, is that there is a push and an onus now in legislation on the employer to remind your employees, to update them, to help them to use their annual leave.

And I suppose we always have those employees within the organisation. Some are really good at taking the leave. When you come back on 2 January, they're looking for details of when the business is going to be open and closed during the year and when they can get their holidays booked.

But there will also be those ones that are really bad at taking their leave. You're getting to the end of the year and they're sitting with a whole lot of days to take and you're thinking, "How are we going to do this?"

So the idea is that the leave should be spread across the year as best as possible. You will get employees that will come and say, "Look, I have an anniversary coming up this year. We want to take two weeks or three weeks", or, "I'm going to visit a relative in Australia and we're going to need three weeks", or, "We're going to Disneyland, and we need the time in order to do that". That's the sort of ones that come along. And then there are the weddings and other bits and pieces.

So you'll get people that are very proactive about it, but you'll also get . . . That's where the problems arise and that's where the carryover issue starts to happen, and you're looking at your policy and procedure to see what it says.

So the other thing then is just that the rate of pay for annual leave that is accrued comes under Article 15 of the Regulations. There is a document that is available. I thought it was quite a clunky document. I didn't think it was the most digestible document. I think it's Business and Industry. It's this document here.

Legal-Island have information up in relation to it. Labour Relations Agency have also some information available as well in relation to it, which is more digestible. Then there's good information just available on the Department for Economy, and there's a bit about employment rights and things like that, and they've updated the section in relation to holiday pay.

Holiday pay is something that's always at the forefront of our minds, really, because we've had Agnew and we've had that long saga in relation to it. So I was maybe just going to delve into it a little bit more and maybe cover off . . . The two main aspects, as I see it, are there's the carryover of holidays and holiday pay, and then there's also the payment of leave and what happens in and around the payment of it.

And there's no doubt, Christine, that these issues do touch on all of those classic holiday issues and problems that arise and that have been dealt with by years of case law, and ultimately for us with the Agnew case and the bringing about of the Supreme Court decision towards the end of last year as well.

So the first thing you really need to look at is the carryover of holidays and holiday pay. Everybody will be sort of familiar enough with the position here in Northern Ireland, that we have our entitlement to our four weeks' leave under the EU Directive, and then we have an additional 1.6 weeks' leave that brings us up to our 5.6 weeks that is based purely on UK law.

There are lots of arguments that Agnew delves into. I'm not going to go into it this morning, but Agnew delves into, "How do you apportion that? What is the EU element of your leave? What isn't?"

So there are lots of complications in and around that. But in general, if you're a full-time worker, you have the ability for a minimum of 5.6 weeks' leave, and you always need to look at your contract to see if you're getting any more on a contractual basis. But the bare minimum for a full-time employee is the 28 days, or the 5.6 weeks.

What we have, then, under these regulations, they amend Article 15 of the original 2016 Working Time Regulations, and what they say is that workers will be able to carry over 5.6 weeks' of leave. So all of your statutory leave, you can carry that over into the next holiday year if you've been unable to take the leave due to already being on statutory leave, so the likes of maternity leave, adoption leave. Just to make that clear, that's the 5.6 weeks. That's the full entitlement.

So if you've been off for a year on maternity leave and you haven't been able to use your holidays, you can carry those over into the following year.

And you can imagine the headache that that creates for employers. There's an employee coming in with essentially, then, 5.6 weeks already. They could have more in their contract. And then in addition to that, the further 5.6 weeks and how you work that out over the year.

A lot of times when people are returning from maternity leave, they will look at using their holidays that they've accrued and built up. And maybe just for that sort of reintroduction period, the gradual approach to returning to work again, holidays can be used for it, which is helpful.

But it could potentially be a significant amount of headache for someone that's coming in with double their holidays, essentially, back at the end of the year.

The second one is that workers can carry over four weeks' leave if they're unable to take their leave because of sickness. So if you've been absent from work for the holiday year, you can then carry over four weeks. So you don't get to carry over your 5.6 weeks, just your four weeks, if it's a result of sickness. Obviously, if it's a statutory leave, it's a full 5.6.

Interestingly, what the amended regulations say is that that you can carry over the leave for a further period of 18 months from the end of the leave year in which the entitlement originally arose. So it does put in a period to say that you have to use the leave within those 18 months. That's helpful, because you do get a lot of queries and questions arising in relation to the position around that.

And then also, in addition to that, it does say that workers are able to carry over four weeks' leave where the employer fails to recognise a worker's right to paid annual leave. So I think that relates to more if you have been miscategorised as self-employed and not a worker or an employee.

Christine:  Sorry to interrupt, Seamus. I think that comes from the Pimlico Plumbers cases where they were saying, "No, you're not a worker, so you're self-employed". And then I think the court took it in view of that behaviour.

Seamus:  Yeah, that's right. And the second one is where the employer fails to give the worker a reasonable opportunity to take their leave or to encourage them to do so. That's interesting, I think.

Then the last one is where the employer fails to inform the worker that any leave not taken by the end of the year, which can be carried over, will be lost.

So it does seem to me that you can still facilitate that snooze-you-lose aspect, but not in that format any longer, because you can't sleep on it. There's an onus on the employer here to essentially assist the employee in using their leave.

That's the real classic problem, that people get to the end of the year and say, "Look, I haven't had an opportunity to use my leave because it's been so busy".

And when you think about what has happened over the last couple of years, we've obviously had the pandemic and then we had the Big Resignation. A lot of people have had to essentially pick up the slack where there have been problems in terms of recruitment, and that has resulted in problems arising for people to be able to take their leave.

So if you're specifically saying, "Look, I haven't been able to take my leave because of workloads and issues that have arisen", there's a sound argument that you can carry over a maximum of four weeks into the following year.

And I think probably the important message is that you're going to have to have a process now where you are monitoring an employee's annual leave throughout the year, and you can't just leave it in their hands. This is specifically for those employees that are bad at taking their leave and tend to leave it until the end of the year.

What can really be a challenge as well is where you get the employee that comes and says, "Look, we can't plan our holidays because we have a sick relative or because we have an event that's taking place. We're going to be moving house and we don't know when it's going to happen", and they save that leave. And then you get to the end of the year and there's a problem with the leave itself.

What you don't want to happen is that aspect of having to carry over loads and loads of annual leave from the year before, because it creates a problem in the following year.

Christine:  Yeah. We've got a question, Seamus. I think it fits in very well here. If someone was off long-term sick, so for two-plus years, how much accrued leave are they entitled to be paid if they decide to resign from your employment?

Seamus:  Well, on the sickness basis you're carrying over the maximum of four weeks under the regulation, so it's not the 5.6 weeks. And it's clear there that under the regulations, you can carry that over for a maximum period of 18 months.

You do need to be careful about it, because it's 18 months from the end of the leave year in which the entitlement originally arose. So as long as that doesn't cause any problems.

But it's helpful in the sense because that has been part of the problem with Agnew, as well, that people have been saying. What is the period for this? How far can you go back?

There are all those Agnew arguments, particularly around if there's been a break and calculating when the leave starts and ends and all that sort of stuff. But the legislation on this is fairly clear that you have the period of the 18 months to carry over. So if somebody's leaving, that's when the accrual would be, as I see it.

Christine:  A bit of fancy footwork and calculations would need to go on. You're going to have to get your little plan out and start working out when would the leave year start and end, when they were off, the leave during that period, and roll that over. Well, I would say I wouldn't fancy doing that calculation, but . . .

Seamus:  No. It's complicated. And I'm sure that there are really good applications and software that a lot of listeners will use that will assist in relation to doing those calculations. But sometimes, as you probably remember from your days in practice as well, you just have to get the notepad and the pen out and work through it and get to the point where you're figuring it out.

It's not easy to do, particularly whenever you've got people working part-time hours, maybe shift work, and certain days of the week one week and different days the next. It is difficult in relation to it.

The other point just then in relation to it is the payment of leave. And what's interesting there is that you have an amendment to Regulation 20 of the Working Time Regulations, and it says that the leave is paid under Regulation 15.

The payments include commission payments, which are intrinsically linked to the performance of tasks which a worker is obliged to carry out under their contract; payment for professional or personal status relating to length of service, seniority, or professional qualifications; and other payments such as overtime payments that have been paid regularly to your worker. And then they say, "In the 12 weeks preceding the calculation date".

So two points there, as I see it. You have to look at this aspect of what is normal pay. And we know the case law that has built up over the years of what is normal pay. If my normal pay includes my commission payments, if it includes my overnight stay work . . . I'm trying to think of some of the other examples going back to the [BA 00:24:46] case and the big chunk of cases that are on holiday pay. You have to look at what is normal pay, but the legislation is making it clear now through the regulations that it does include that additionality.

Then also this idea that it says that you have 12 weeks from the calculation date. Now, we know that this is going to be difficult. We know what Agnew says, because Agnew says that your reference period for calculating normal pay should be 52 weeks. So you're looking at it over a year. And then you've got the regulations that are now saying 12 weeks.

So we're going to have a bit of rubbing that's going to happen. I suppose, ultimately, we're going to need to get some clarification either from government on it or from case law.

Christine:  Yeah. I mean, I was at an event earlier in the week and there was some debate on it. And one perspective is that Agnew says that the reference period can be 52 weeks, and people are clinging to that "can". So it's saying it wouldn't be unreasonable for it to be 52 weeks. Of course, a lot of people at the end of last year changed how they were doing their calculations to 52 weeks, because we thought Agnew gave us the answer.

But apparently, the reason the amended regulations say 12 weeks is because they would have needed to go out to consultation on changing that from the original regulations, and we didn't have a government at that time so they weren't able to do that. So it's left this kind of confusion again in one of the most confusing areas of employment law.

I heard two partners in a law firm having a very polite but definite disagreement about whether you can do 52 weeks or 12 weeks.

I think it's only going to become a problem if you have employees working lots of unusual hours and work patterns. But you really, again, need to get your pad and pen out and do your calculations. If the 52 weeks and 12 weeks and there's not much difference, then you're okay. It will be a problem, though, if it looks like you're trying to do the calculation to the detriment of your employees. Isn't that it, really?

Seamus:  Yeah, it's the wording that it said in Agnew that it's a question of fact, and the pragmatic reasons for a 12-month reference period. I mean, I think where you're able to do the calculation and it's done so on a fair basis, that it's not trying to cheat or shorten or deprive anybody, I think if that period is the shorter and it works, then I think that's okay.

Certainly, look, going back to when I started out in employment law, going back to 2003, in and around those periods, your 12-week reference period was always sort of what you used as your guiding principle. But it maybe just didn't work in the test case that you would have done and the employee might have come back and said, "But that doesn't work because of X, Y, and Z", and you would have always looked to try to do it as fair as possible.

So I think the key principle, that's what it is. But it's just to bring that to everybody's attention, that there's a bit of rubbing. And it's interesting that if there had been consultation on it, what that might have looked like.

Christine:  Yeah. I've just got a wee bit of a clarifying question. So somebody's asking about the carryover of four weeks' leave when you're sick. That is only for long-term sickness, isn't it? It's not ad hoc, "I've got a cough, a cold", and then suddenly reset my holidays. That would be very unusual. So just to clarify, it's only for those people on long-term sick.

Just keeping a wee eye on the time, Seamus, I'm going to just wrap up the Working Time Regs section here with my three takeaways really from what I've learnt today.

So firstly, employees are entitled to carry over any unused leave if they have been unable to use it due to sickness or family leave. The balance needs to be struck between that four weeks for sickness and 5.6 weeks for the family leave.

Secondly, you've got to be proactive here and regularly remind your employees of their leave entitlements, that they need to take it, encourage them to take it, and what happens if they don't take it, i.e. you use it or lose it.

And thirdly, the 52-week holiday pay reference period for calculating holiday pay as recommended by Agnew is not necessarily correct, but it's not necessarily incorrect. It could be that 12 weeks that's been codified in the new regulations. We're all divided in the legal community about what the best approach is, so you need to run the numbers yourself and see if it makes a difference. And if in doubt, give Seamus a call essentially.

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