Veitch Penny LLP - Exeter | Crediton, Devon

Case

Ainsworth and others v Inland Revenue
Court of Appeal - (22 April 2005)

Issues

(1)Wages
(2)Holiday Pay
(3)Working Time Regulations (the Regulations)

Facts

A number of Inland Revenue employees made claims to the Employment Tribunal on these issues. One of the employees, Mr Ainsworth, was dismissed by the Inland Revenue after a period of ill health which had lasted for more than a year. He had exhausted his statutory and contractual entitlement to sick pay but had remained on his employer’s books.

His claim was for holiday pay due to him under the Regulations. He claimed accrued statutory holiday and compensation for untaken leave when his employment was terminated.

Mr Ainsworth was successful at the Employment Appeal Tribunal. He was able to rely on the decisions in Kigass Aero Components Ltd –v- Brown (2002) which ruled that an employee on long term sick leave but receiving no pay, was entitled to up to four weeks statutory holiday pay per year and the case of List Design Group –v- Douglas (2002) which ruled that an employee could claim lost holiday pay for previous holiday years.

The Inland Revenue appealed the decision to the Court of Appeal.

Decision

The appeal would be allowed. The Court of Appeal overturned both the Kigass and List Design decisions. With regard to the Kigass issue, the Court of Appeal said that the natural meaning of “leave” was a release from the obligation to work. The Regulations stated that workers were entitled to four weeks annual leave each year. As Mr Ainsworth was not at work, he did not need to be released from the obligation to work. It also noted that the Regulations were based on health & safety concerns, were intended to release employees from the pressures of daily work. As Mr Ainsworth was not at work, he would gain no such benefit from taking leave.

On the List Design issue, the Court agreed that Ainsworth should not be able to claim for back-dated holiday pay for a period of several years. Under the Regulations, employees can only claim for unpaid statutory holiday entitlement for the year in which that entitlement falls, claims should be brought within 3 months of the date in which the right arises. Such a claim could only be brought under Regulation 30 of the Regulations and not as a claim for unauthorised deductions under the Employment Rights Act 1996.

Comments

Whilst this decision is useful in providing clarification in circumstances such as this, it does cause a number of anomalies. What is the situation for a worker who has had six months of the year on sick leave and six months at work? If a worker does not work for twelve months is not entitled to any leave under the Regulations, is a worker who only works for half the year only entitled to half the leave? What happens to a worker who is absent for the majority of the year but returns to work for a couple of days at the end of it? Is he then entitled to four weeks paid leave or to compensation in lieu if dismissed?

The Court of Appeal accepted that these anomalies would occur and noted they could only be rectified by Parliament. There are certainly going to be more cases in this area before this issue is fully resolved.