12 October 2005

Introduction

1.1              I propose to focus my presentation around seven aspects of the Working Time Regulations ("WTR") which have been the subject of recent developments and which are (hopefully!) of interest to practitioners.  The seven areas are:

·                     holiday pay during sick leave;

·                     rolled-up holiday pay;

·                     on-call workers;

·                     the use of the individual opt-out and proposed European changes to this;

·                     Unmeasured workers;

·                     Offshore workers;

·                     Enforcement.

Holiday pay during sick leave

2.1              As we know, Regulation 13 provides that:  "A worker is entitled to 4 weeks' annual leave in each leave year…".  It goes on to provide that entitlements cannot be substituted with a payment in lieu, except where the worker's employment is terminated.  Where in the year of termination, a worker has accrued more holiday entitlement than they have actually taken, they are entitled to a payment in lieu of the unused portion (see Regulation 14).

2.2              Following the case of Kigass Aero Components v Brown [2002] IRLR 312 (EAT) and other cases, it was established law that workers absent on long-term sick leave were still entitled to take the full four weeks' statutory leave under Regulation 13.  It also followed that where employment relationships had been terminated, workers could claim a payment in lieu of unused statutory leave under Regulation 14, even though they might have been off work sick for long periods during the leave year, or even absent altogether.  The rationale was that the term "worker" did not import any requirement for actual work to have been done and that the definition of "working time" in Regulation 13 did not require any time to have been spent actually working as a pre-requisite to the entitlement.

The Ainsworth Judgement

2.3              In the case of the Commissioners of Inland Revenue v Ainsworth & Ors, 2005 EWCA Civ 441, the Inland Revenue decided to challenge the position when 5 of its employees brought tribunal claims under the WTR for holiday pay, even though they had been absent on sick leave for the whole of the leave year and had exhausted their entitlements to contractual and statutory sick pay.  One of the five employee's sought holiday pay while still employed; the other employees' claims were made after the Inland Revenue had terminated their contracts of employment.

2.4              The Tribunal in the first instance applied Kigass and accordingly found in favour of the employees.  The matter then came before President Burton in the EAT.  He declined to allow the Inland Revenue's appeal on the basis that it would inappropriate for the EAT to overturn one of its own recent decisions, but he did give permission for an appeal to the Court of Appeal.  That appeal was heard last March and Judgment was handed down on 22 April 2005.  The Court of Appeal allowed the appeal and overturned Kigass. 

2.5              The Court of Appeal essentially agreed with the Inland Revenue's primary submission that the previous emphasis on the definition of "worker" in Kigass, rather than on the concept of "leave" had produced a flawed decision.  Leave was intended to fulfil a health and safety need and required notice to be given (under Regulation 15) to the employer to enable work planning.  The purpose of leave entitlement was to relieve employees of the daily pressures of work.  If they have been absent on long-term sick leave, they were already relieved from these pressures.  The Court of Appeal was therefore persuaded that a worker on long-term sick leave did not need leave and an arbitrary payment of four weeks' holiday pay would simply be a windfall.

2.6              I understand that the current state of play in the litigation is that the employees have petitioned for leave to appeal to the House of Lords and that a decision on this is expected shortly. 

2.7              A potentially grey area arising out of the Ainsworth judgment is what happens where (as is quite common) a worker is on sick leave for only part of the leave year.  For example, Counsel for the employees put the following example to the Court of Appeal:  "A worker with a leave year from 1 January to 31 December is off sick from 1 January until 31 March, returns to work from 1 April until 30 June, at which time his employment is terminated.  He has made no application for leave.  The only sensible quantification of A (ie A in the Regulation 13 formula) is four weeks.  It is unworkable to assume that A should be reduced to reflect the time off sick.  Should it be discounted by 50% to reflect the fact that he was off for half of the six months or by 25% to reflect the fact that he was off for one quarter of the leave year, only half of which had expired at the termination date?"

2.8              Although the Court accepted that this was an "ingenious" submission and that some meritorious claimants seeking compensation under Regulation 14, whose circumstances have been complicated by sick leave, may fall through the net, it nevertheless felt that Regulation 14 should be construed consistently with its interpretation of Regulation 13.  While acknowledging that some unfortunate anomalies could occur in sickness cases, this was, stated the Court, a matter for the legislature to address, not the courts.

2.9              Therefore, a possible consequence of the decision is that workers do not accrue holiday entitlement while off sick.  However, my view is that the crucial question to ask is not how long has the employee been absent on sick leave for, but when have they served notice to take holiday.  Is it at a time when they have already got leave of absence (ie authorised sick leave)?  If it is, then they are not entitled to a different type of leave at the same time (ie holiday leave).  The real question is therefore a prospective one, and not a retrospective one: you can't have leave when you are already on leave. 

2.10          If I am wrong and the question is indeed a retrospective one, this would wreak havoc in HR departments; it would mean that employees' holiday entitlements would have to be constantly adjusted to take account of any sickness absences.  It could also have knock-on implications for the calculation of holiday pay: if the daily rate of pay is based on annual pay divided by the number of working days in the year, the number of working days cannot include days off sick, thereby enabling the daily rate of pay to be increased by taking more time off sick, and more holiday pay to be obtained in many cases unless the four week minimum entitlement was capable of being reduced proportionately.

2.11          Commentators have also posed the question of whether the decision has wider implications for employees who are on other forms of unpaid absence, for example, unpaid additional maternity or adoption leave.  While Kigass remained good law, those employees were entitled to paid statutory holiday irrespective of the fact that they had not performed any work during a particular leave year. 

2.12          In my view, the position concerning maternity and adoption leave is, however, quite different from that of sick leave.  This is because they are the subject of separate statutory rights designed to protect employees in those special circumstances.  This can be seen in the ECJ's decision in Gomez v Continental Industrias del Cauch SA (Case C-342/01).  The ECJ ruled that Article 7(1) of the Working Time Directive ("WTD"), Article 11(2)(a) of the Pregnant Workers Directive and Article 5(1) of the Equal Treatment Directive meant that: "A worker must be able to take her annual leave during a period other than the period of her maternity leave, including in a case in which the period of maternity leave coincides with the general period of annual leave fixed, by a collective agreement, for the entire workforce."

2.13          On the facts of the Gomez case, factory workers employed by Continental could only take leave during certain periods over the summer.  Gomez was on maternity leave during those periods and was denied the right to take the leave after her maternity leave had expired.  The Court emphasised the "particular" importance of every worker's entitlement to paid annual leave "from which there can be no derogations".  The Court then distinguished maternity leave from annual leave.  Maternity leave, it noted, was intended to protect a woman's biological condition during and after pregnancy and to protect her special relationship with her child.

So where does this leave us when advising our clients? 

2.14          Well, until we either have further guidance from the legislature or the House of Lords, the sensible advice would be:

·                     If an employee has been absent on sick leave for the entire leave year, they are not entitled to any paid annual leave under Regulation 13, and if they are dismissed having been absent since the start of the leave year, they are not entitled to a payment in lieu of unused holiday leave under Regulation 14.

·                     Where an employee has requested leave, the employer should consider if it would be at a time when they would already be on sick leave:  if it would, they are not entitled to it; if they wouldn't, they are. 

·                     There is nothing to prevent an employer from providing that any contractual holiday entitlement which is an enhancement to the statutory entitlement ceases to accrue during periods of sick leave.

The List point

2.15          The Court of Appeal in Ainsworth also considered whether another decision of the EAT should also be overturned.  That was the case of List Design Group Limited v Douglas & Ors 2002 ICR 686, EAT.  The EAT in List held that the right to receive a payment in lieu of annual leave could be claimed as wages under s. 13 of the Employment Rights Act ("ERA"), and thus be linked back to previous years to form a series of deductions within s. 23 of the ERA.  The Inland Revenue argued that Regulation 30 of the WTR (which states that claims must be brought within three months of the initial breach of the right to annual leave) should not be capable of being circumvented via the unlawful deduction from wages legislation.  It noted that the provisions of the ERA were enacted at a time when the WTR-driven rights did not even exist.  The Court of Appeal agreed with the Inland Revenue.  It took the view that the WTR were plainly intended to provide a single exclusive regime for the enforcement of the new statutory rights to annual leave. 

2.16          This ruling has a significant impact on the potential scale of WTR annual leave claims, because by denying employees the "series of unlawful deductions" route, the courts will only be called upon to determine relatively small value claims.  It also means that chairmen sitting alone do not have jurisdiction to deal with a WTR claim by virtue of s. 4 of the Employment Tribunals Act 1996, which only permits a determination of s. 11 and 23 ERA claim (see British Bakeries Limited v Nascimento IRS Employment Revenue Issue 832).

3.                  Rolled-up Holiday Pay

3.1              In sectors where irregular working patterns are common, employers often find it convenient to pay "rolled-up" hourly or weekly contractual rates that expressly include an element of holiday pay.  No additional payments are then made when workers actually take holidays.  In the case of MPB Structures Limited v Munro [2002] IRLR 601, the Court of Session in Scotland held that a provision in the employee's contract providing for an allowance of 8% in respect of holiday pay was void in that it limited the effect of the WTR and so was caught by the restriction on contracting out.  This was even though the employee's terms of employment stipulated that it was the employee's responsibility "to retain such advance payments in order that you are in funds at the time you do take holidays".  Emphasising strongly the health and safety basis of the WTR, the Court said that it was clear that the WTD treats the right to annual leave and to payment for it as part of a single entitlement.  The Court was persuaded that workers have the right to be paid for annual leave at the time when it was taken.

3.2              However, the Court of Appeal in Caulfield & Ors v Marshalls Clay Products Limited [2003] IRLR 552 took a different view, pointing out that Article 7 of the WTD does not expressly require holiday pay to be paid at the time holiday is taken.  Given the conflicting views taken by the Court of Session, the Court of Appeal decided to refer the question of the legality of rolled-up pay to the ECJ.  I am aware that the matter was heard by the ECJ on 15 September 2005 and that the Advocate General's Opinion is due out on 27 October 2005 (Judgment presumably to follow 2-3 months after that).  The primary argument for the ECJ on behalf of the Commission was that the ability to pay rolled-up holiday pay meant that there was no effective mechanism to ensure that workers actually took their holiday entitlements and, in fact, there was an incentive not to do so, as they were being paid more. 

3.3              Therefore, the current situation is that pending the decision of the ECJ, rolled-up payments of annual leave are lawful in England and Wales, but unlawful in Scotland.  This position has recently been affirmed by the EAT in the case of Smith v AJ Morrisroes and Sons Limited [2005] IRLR 72.  The EAT gave judgment in 3 joined cases and P Burton redrafted his Marshalls Clay guidelines on the issue, providing that:

·                     There must be mutual agreement for genuine payment for holidays, representing a true addition to the contractual rate of pay for time worked.  The best way of evidencing this is for:

(a)               the provision for rolled-up holiday pay to be clearly incorporated into the contract of employment;

(b)               the percentage or amount allocated to holiday pay (or particulars sufficient to enable it to be calculated) to be identified in the contract, and preferably also in the pay slip;

(c)               records to be kept of holidays taken (or of absences from work when holidays can be taken) and for reasonably practicable steps to be taken to ensure that workers take their holidays before the end of the relevant holiday year. 

3.4              P Burton then went on to apply this guidance to the facts of the 3 cases before him as follows:

·                     S was paid £150 per day but was not entitled to holiday pay.  Following the coming into force of the WTR, S was asked to sign a new contract under which the employer would deduct £12 from his daily rate and pay it back to him as and when he took holiday.  S refused to sign, stating that he was not prepared for the employer to pay him holiday pay out of his own wages.  Since the rate of £150 per day remained the same before and after the employee's contract was purportedly varied to include holiday pay, there was no holiday payment that was genuinely additional to the contractual rate of pay and so there had been a breach of the WTR. 

·                     When B commenced employment, he was asked to sign a contract that expressly provided that "for statutory holiday pay entitlement of an additional 8% is added to your hourly rate giving a total daily rate of £140".  However, B claimed that he had previously been told that the basic daily rate was £140.  The EAT accepted that there was a genuine contractual agreement between B and his employer as to remuneration, but that alone was not sufficient.  The Tribunal had to be satisfied not only that the provision for rolled-up pay was mutually agreed, but also that it in fact provided a true addition to the daily rate.  The employer had failed to present any evidence that this was so.  Accordingly, the Tribunal at first instance had been right to uphold the claim.

·                     W worked as an "unattached teacher" for North Yorkshire County Council.  His hourly rate of pay was calculated by dividing the annual salary of a full-time teacher by 1,000.  It was clear that a full-time teacher's pay included holiday pay.  Accordingly, the EAT concluded that W's pay also included an element of holiday pay even though it had not been specifically itemised in his particulars of employment.  The fact was that there was a contractual provision for rolled-up holiday pay and that the percentage or amount of that holiday pay could be readily ascertained by looking at the underlying documents which were incorporated into W's contract of employment.

3.5              The most recent decision which has looked at this issue is the case of British Airways Plc v Noble & Anor EAT/0009/05/RN.  The case related to Regulation 16(1) which requires that workers be paid "at the rate of a week's pay in respect of each week of leave".  Under N and F's contracts, they received basic pay and shift pay.  The formula adopted by BA for calculating shift pay did not reflect their entitlement to paid holiday under the Regulations and resulted in a deduction of 4/52.  The purpose of the reduction was to prevent employees receiving shift pay in respect of weeks when they were on holiday.  BA argued that this system involved no breach of the WTR, since the workers were paid the same weekly pay throughout the year, including their weeks of leave. 

3.6              The case went before the EAT who examined the rolled-up holiday pay cases.  They noted that (in England and Wales at least) rolled-up contractual payments could be made to workers, provided that they included a genuine enhancement for holiday pay.  In this instant case, there was no rolled-up holiday pay issue, because employees were paid throughout the year, regardless of whether they were on holiday.  Nevertheless, the EAT concluded that BA had to demonstrate that it was making genuine holiday payments: it had to satisfy the Tribunal that there had been a genuine non-deduction of sums in respect of the holiday period.  In the EAT's view, the intention of the workers' contract was to make no payment for shifts during 4 weeks out of 52.  Therefore, there was a reduction of payment during the working days in the rest of the year to pay for the workers' holiday.  That said, the underpayment only amounted to a breach of the WTR insofar as it was made in respect of the 20 days' statutory leave, and not in relation to the contractually enhanced leave (N and F were contractually entitled to 34 days paid holiday a year).  Accordingly, BA was entitled to pay shift pay at the reduced rate in respect of the number of day's contractual holiday over and above the workers' statutory entitlement. 

4.                  On-call Workers

4.1              Working time is defined in Article 2(1) of the WTD as "any period during which the worker is working, at the employer's disposal and carrying out his activities or duties, in accordance with national laws and/or practice".  The definition therefore contains three elements.  Initially it was unclear whether this definition was to be read cumulatively, to include all three elements, or disjunctively.  This was of particular significance to on-call workers since, if read disjunctively, time spent at home waiting for the phone to ring would constitute working time. 

4.2              Matters were clarified in two cases that went before the ECJ.  The first was Sindicato de Medicos de Asistencia Publica (SIMAP) v Conselleria de Salidad why Consumo de la Generalidad Valenciana [2000] IRLR 845 (aka the "SIMAP" case).  The case concerned the working hours of doctors in Spain and raised issues as to the treatment of time on call for the purposes of the WTD.  The case was brought by SIMAP, the Union of Doctors in the Public Health Service, against the Ministry of Health of the Valencia Region.  Doctors who worked in primary care teams in the public health sector were required to work 40 hours a week plus any time as may be required as a result of being on-call.  Where a doctor was on-call, only time actually worked was taken into account in determining the maximum working time.  The doctors were obliged to be present and available at their workplace with a view to providing their professional services. 

4.3              The ECJ ruled that the fact that the doctors were obliged to be present and available at the workplace meant that they were carrying out their duties.  However, where doctors are on call by being contactable without having to be at the health centre, only time linked to the actual provision of primary care services should be regarded as working time within the meaning of the WTD.  In that situation, even though they were at the disposal of their employer, in that it must be possible to contact them, they could manage their time with fewer constraints and pursue their own interests.

4.4              The second case was Landeshauptstadt Kiel v Jaeger [2003] IRLR 804.  The case was referred by the German Government and concerned whether time spent on-call by a doctor in a hospital amounted to working time in cases where the doctor was permitted to sleep in the hospital at times when he was not required to work.  When Mr Jaeger was on-call, he had to stay at the clinic and was provided with a room where he could sleep when his services were not required.  Under the applicable collective agreement, the average time spent actually working during any such period could not exceed 49%.  However, Mr J claimed that all of the time he spent on-call at the hospital was working time within the meaning of the WTD.  The ECJ agreed with him.  It held that a period of duty spent by a hospital doctor on-call, where the doctor's presence in the hospital was required, constituted in its entirety working time for the purposes of the WTD, even though the person concerned was permitted to rest at their place of work during periods when their services were not required.  This was because an employee available at the place determined by the employer could not be regarded as being at rest during the periods of his on-call duty when he was not actually carrying out any professional activity.  The decisive factor was that they were required to be present at the place determined by their employer and to be available to the employer in order to be able to provide their services immediately in case of need.  As those obligations made it impossible for the doctors to choose the place where they stayed during waiting periods, they had to be regarded as coming within the ambit of the performance of their duties.

4.5              The rationale behind the ECJ decisions was followed recently by the EAT in the case of Vasquez-Guirado & Anor t/a The Watermeadow Hotel v Wigmore UK EAT/0033/05/RN.  In that case, W was employed as a live-in "hotel person" and was entitled to free hotel accommodation.  When she was not carrying out tasks at the hotel she was on-call.  W was dismissed when she brought her cats to live with her in the hotel.  She complained to an employment tribunal that she was due unpaid wages and accrued holiday pay based on a working week of 132 hours (representing time spent on-call as well as time spent actually performing her duties).  The EAT upheld W's arguments; on-call time counted towards W's working time, as W was not entitled to go out and was required to be available at the hotel to deal with emergencies.  The fact that she was dismissed for bringing cats to live with her in the hotel showed that it was not her "home" but part of her workplace.

4.6              This line of case law caused a great deal of concern amongst some European Member States, particularly those who were concerned about the impact in the health sector.  For example, during the hearing relating to the Jaeger case, the representative of the German Government said that if the Court confirmed the case law in the SIMAP case, staffing requirements would increase by some 24% and between 15,000 and 27,000 additional doctors would have to be employed, although far fewer doctors were out of work in Germany.  Germany estimated, on that occasion, that additional costs would run to €1.75 billion.  The UK felt that it would be necessary to recruit between 6,250 and 12,550 doctors and 1,250 staff other than doctors.  The additional costs it estimated would come to between £380 and £780 million.  Finally, the Netherlands took the view that it would need to recruit 10,000 new care staff, which would represent an additional cost of €400 million.  All of these Member States agreed that, even if it were possible, from a budgetary point of view, to recruit the staff required to provide the same level of care, this would be impossible in practice because of the current lack of candidates with the necessary training to take on these jobs. 

4.7              In order to limit the impact of the ECJ's case law, it was anticipated that some Member States would rely on individual opt-outs as a means of getting around the problem and requiring their health workers to work longer hours.  This prompted the European Commission to propose a significant compromise, by including two new definitions in the WTD.  The definitions of "working time" and of "rest period" would remain unchanged.  Their proposal was to insert two new definitions: "On-call time" and "Inactive part of on-call time".  The aim of two new definitions would be to introduce a concept into the WTD which is not strictly speaking a third category of time, but a mixed category incorporating, in different proportions, the two concepts of "working time" and of "rest period".  The inactive part (eg sleeping at the employer's premises) of on-call time would not be considered as "working time" (unless otherwise stipulated by national law or agreed), whereas the periods during which the worker carried out his activities or duties would be regarded as working time within the meaning of the WTD (see Com/3-7523). 

5.                  The Opt-out

5.1              Under the WTR, workers can choose to contract out of the 48 hour maximum working week.  This is provided for by Article 18(1)(b)(i) of the WTD.  This says that Member States need not apply Article 6 on the maximum 48 hour week provided that certain conditions are satisfied, including that:

·                     The worker's consent has been obtained previously.

·                     Details of workers who have given this consent must be kept.

·                     The employer must keep up to date records of all workers who work more than 48 hours a week which must be available to competent authorities on request.

5.2              The UK originally complied with these requirements, but when the WTR were amended in 1999 (SI 1999/3372) the record-keeping requirements were diluted significantly.  Currently, UK law requires employers to only keep records of the names of workers who have opted out, but not the terms under which the workers have agreed that the limit should not apply, nor the number of hours actually worked by them.  These provisions of national law have led to a paradoxical situation where there may be records on hours actually worked by workers subject to the 48 hour limit, but not for those who have opted to work for longer hours, who are significantly more exposed to risks to their health and safety.  There is also the additional problem that it is impossible to monitor compliance with other provisions of the WTD which the workers cannot opt out of .

5.3              The European Commission has been deeply unimpressed by (a) the UK's widespread use of the opt-out and (b) its failure to comply with the opt-out preconditions which are prescribed by the WTD.  The UK is the only Member State which currently makes use of individual opt-outs. 

5.4              On the evidence presented to the European Commission, they noted a "certain generalisation" in the presentation of the opt-out agreement when the work contract is signed.  This practice arguably undermines another provision of Article 18 which aims to guarantee the worker's free consent by ensuring that no worker may suffer harm due to the fact that he is not prepared to give his agreement.  It is legitimate to suppose that if the opt-out agreement must be signed at the same time as the employment contract, freedom of choice is compromised by the worker's situation at that moment. 

5.5              According to available figures, approximately 4 million people, or 16% of the UK workforce, currently work more than 48 hours per week, although there were only 3.3 million (or 15% at the beginning of the 1990's (see Beswick J et al Working Long Hours, HSL/2003/02/P4).  It also appears that the number of people working over 55 hours per week has increased, and now stands at 1.5 million.  In fact, the UK is the only Member State where weekly working time has increased over the last decade.  In short, normal weekly working time is significantly higher in the UK than in the other Member States (Greece is second, Spain third and Portugal fourth, with Belgium being bottom).

5.6              Interestingly, the number of workers who have signed an opt-out agreement in the UK is significantly higher than the number of people actually working more than 48 hours.  This again supports the view that UK employers have been far too free in requiring employees to sign opt-outs when they are recruited, just in case they work more than 48 hours a week.

Commission's proposals

5.7              So what does the Commission propose doing about this, particularly given the UK Government's vocal objection to the abolition of the opt-out provision?  Well, it suggested a compromise on 1 June 2005 (see Press Release, Working Time Directive - Revised Proposal of the Commission) which (in addition to the proposed on-call working time changes noted above) proposed that:

·                     The opt-out would be retained for up to 3 years following implementation of the Directive (usually 3 years after adoption of the Directive, so probably 2012);

·                     Thereafter Member States may ask the Commission for a renewal "for reasons relating to their labour market arrangements";

·                     The opt-out must be laid down by collective agreement or by law; and

·                     Workers who have opted-out cannot work more than 55 hours in any week.

In addition, as a further compromise they proposed that the reference period for calculating an employee's average working week could be extended from 4 to 12 months (presumably as a further incentive to employers aimed at convincing them that an opt-out should be unnecessary as there will be very few people who work an average of more than 48 hours a week over a 12 month period).

5.8              The UK Government was reported to be confident that it had assembled sufficient support to retain the opt-out, with those backing the UK reportedly including Germany, Poland, Slovakia, Cyprus and Malta.  The press reports following the meetings held at the beginning of June 2005 claimed that the UK and its allies had successfully blocked the Commission's suggested compromise, at least in relation to the loss of the opt-out, and that it will have to be redrafted before being put before the Council of Ministers.  It is possible that this may not occur before next year, after the end of the UK's current presidency of the EU which expires on 31 December 2005.

6.                  Unmeasured working time

6.1              Article 17(1) of the WTD provides that where a worker's working time is not measured or predetermined, or can be determined by the worker himself, a number of the WTD protections do not apply, including the 48 hour maximum working week.  Typically, the types of workers who will fall within this category are managing executives or other persons with autonomous decision-taking powers.  They will have complete control over the hours they work and their time is not monitored or determined by their employer.

6.2              SI 1999/3372 added a new provision which provided that where part of the working time of a worker was measured or pre-determined or could not be determined by the worker himself, but the specific characteristics of the activity carried out by him were such that, without being required to do so by the employer, he might also do work the duration of which is not measured or pre-determined, or could be determined by the worker himself, then the full protections of the WTR will only apply to so much of his work as is measured or pre-determined or cannot be determined by the worker himself.  Simply put, additional hours which the worker chooses to do without being required to by his employer do not count as working time. 

6.3              This is clearly intended to deal with the position of professionals who have to fulfil certain tasks but also have a high degree of autonomy in respect of the other parts of their job.  An obvious example is a lawyer:  a high proportion of their work will be pre-determined (ie client work) but they may choose to do other tasks, such as giving talks (!) in order to improve their promotion prospects.  It is that latter part of their work which will fall outside the protection of the WTR. 

7.                  Off-shore workers

7.1              A short, but topical subject.  In July 2005 the Aberdeen Employment Tribunal handed down its decision in Thomas L Russell & Ors v Transocean International Resources Limited & Ors (Case no. S/104056/04).  The proceedings had been brought on behalf of 278 claimants employed by 15 different respondent companies.  The claimants were all employed on off-shore oil and gas rigs outside the UK's territorial waters, but inside the UK sector of the Continental Shelf.  The issue was whether the WTR, which are expressed to apply to "Great Britain only", could be extended to protect workers who work outside Great Britain, but within the UK Continental Shelf. 

7.2              Originally, the WTD excluded any workers engaged in "work at sea", but Directive 2000/34/EC introduced the concept of "off-shore work" and provided that workers engaged in this kind of work were protected by the WTD.  "Off-shore work" was defined as meaning work performed mainly from off-shore installations (including drilling rigs), directly or indirectly in connection with the exploration, extraction or exploitation of mineral resources, including hydro-carbons, and diving in connection with such activities, whether performed from an off-shore installation or a vessel.  These changes were implemented in the UK by the Working Time (Amendment) Regulations 2003.

7.3              The Chairman (Mr R G Christie) hearing the case said that it could be assumed that the Commission was aware of the fact that practically all "off-shore" work is carried out on the Continental Shelf and not in territorial waters.  On that assumption, it seemed to him inconceivable that it would have been the purpose of the Directive to restrict its ambit to areas where there are practically no off-shore installations.  Accordingly, his conclusion on the purpose of the amending Directive was that it was an instruction to Member States to render applicable to those Community workers engaged in off-shore work the various safeguards contained within it and to do so in respect of those locations where such work is taking place.  As practically the entirety of the "British" off-shore oil and gas industry operates in and from the UK sector of the Continental Shelf, the Chairman deemed the workers employed in that industry to be covered by the WTR.

8.                  Enforcement

8.1              A brief word on enforcement of the WTR.  The WTR provides for two sets of rights.  The first are "limits" eg working time and night work requirements and the second type are "entitlements" (eg rest periods).  Subject to the individual opt-out point noted above, workers cannot exceed limits even if they want to, but they can forego entitlements should they choose to. 

8.2              The distinction between limits and entitlements is reflected in the way in which the provisions are enforced:  limits are enforced through criminal sanctions against the employer and entitlements through civil action in an Employment Tribunal.

8.3              The gatekeepers for the enforcement of limits are the Health and Safety Executive ("HSE") in respect of factories, building sites, mines, farms, fairgrounds, quarries, chemical plants, nuclear installations, schools and hospitals and local authority Environmental Health Departments in respect of retailing, offices, hotels and catering, sports, leisure and consumer services.

8.4              The HSE and the Local Authorities have been adopting a reactive approach to enforcement.  That means that there has been an almost complete absence of prosecutions.  In research conducted by Barnard et al for the European Commission, they discovered that only one prosecution had been made - by Breckland Council against a newsagent chain who had a manager working hours significantly in excess of the 48 hour week without signing an opt-out.

8.5              As far as entitlements are concerned, a worker denied an entitlement or payment for statutory paid leave or other rest breaks may complain to an employment tribunal under Regulation 30.  The complaint must normally be made within 3 months of the act or omission complained of, but this period may be extended where the employment tribunal is satisfied that it was not reasonably practicable for the complaint to be presented in time.  In those circumstances, the Tribunal has power to extend time for such period as it considers to be reasonable. 

8.6              The Tribunal can make a declaration and may make an award of compensation in the amount that it considers to be just and equitable in all the circumstances having regard to the employer's default in refusing to permit the exercise of the worker's entitlement, and any loss sustained by the worker as a consequence of that default.

8.7              Given the scheme of the WTR as a whole, the fact that Regulation 30 is limited to providing compensation where employers breach the rest entitlements provisions made sense because the working time limits were subject to criminal sanctions.  In practice, however, this regulatory scheme left a lacuna: how could individuals (as opposed to the HSE) enforce the limits, particularly if they did not want to terminate their contract?  The High Court in Barber v RGB Mining [1999] IRLR 308 came up with an answer.  It said that a worker still employed by the employer could enforce the statutory duty on the employer to observe the particular limits on working time as a civil claim in the courts.  The Court said that it was clear that Parliament intended that all contracts of employment should be read so as to provide that an employee should work no more than an average of 48 hours in any week during the reference period.  This was a mandatory requirement which must apply to all contracts of employment.  Based on this decision, any working time in excess of 48 hours a week provides the basis for a claim based on breach of contract.  However, as the employment tribunals only have jurisdiction to hear breach of contract claims which "arise or are outstanding" on the termination of the employee's contract of employment, this means that breach of contract claims need to be brought in the ordinary courts unless dismissal is at issue.

9.                  Conclusion

9.1              It can be seen that the WTD has undergone a number of important developments over the last couple of years.  The developments should continue over the next year or so; we might have a House of Lord's decision in the Ainsworth litigation, a decision from the ECJ on the rolled-up holiday issue and further proposals from the European Commission to amend the WTD.  Practitioners will need to be alert to all of these developments.

Lisa Mayhew

12 October 2005