Working Time Madness

Adam Smith- Director- Indigo Resourcing

“Madness” may seem like a strong word – after all 28 days a year isn’t that excessive is it? The simple answer is no, it’s not. I have employed dozens of full time staff over the last 20 years, and they have all received 28 days paid annual leave – minimum!

For regular part time staff I also think a pro rata entitlement to 5.6 weeks is entirely reasonable. If someone works 2.5 days a week as opposed to 5 they receive half of the full entitlement, so 14 days paid annual leave per year.

My description of the new annual leave entitlement as madness is targeted specifically at some of the finer provisions of the legislation. Let’s start with casual part time staff. The kind of role or worker I’m thinking of is someone who occasionally works one day a week in the village shop, a university student who does two 6 hour evening shifts as a waiter or someone who takes up a temporary post for three or four weeks.

Let’s say the person working one day a week in the village shop earns £60 a day. They only work occasionally when the owner has other things on, and over a six month period they work 17 days. They earn £1,020, which amounts to around £39 per week. They then decide that they don’t want to be troubled for a while and take three weeks off. The employer is obliged to pay them at least £123.10 for those three weeks, which amounts to more than £41 per week.

I say at least in this example as the employee is entitled to a little over 2 days holiday, and although the employer can round the days up they cannot round them down. The employer meets the cost of the resting occasional worker, and then has to find a casual short term replacement. That replacement works two days during the three week period that the regular cover worker is off and receives £150 – the short term cover is a little more expensive as the hours are longer to include the additional training.

At the end of the three weeks and after only two days work, the casual short term replacement is due ¼ of a day as their minimum holiday entitlement for the 2 casual days worked, or £18.10. That makes the cost of the short term casual worker to the employer £188.28 with on costs, in addition to the paid leave already paid to the regular worker. The total cost to the employer for the two days work is therefore £326.15 – more than 2.5 times the “normal rate”!

To me this just seems unreasonable, unfair on the employer and potentially damaging to our economy. Small businesses will struggle to account for these additional costs. If they pass them on then the customer will pay for what I contend are the excessive annual leave rights, and that may mean a cost increase that the customer cannot stomach. If they absorb them then profits fall, and we must not forget that small business owners need to see a reasonable return to justify their sacrifice and risk.

The second example I give of the student waiter seems equally ludicrous to me. He works every Friday and Saturday evening in a local bar to help pay for his studies. It amounts to 12 hours a week. Under the new system he accrues sufficient annual leave during a 13 week term to take off the last three shifts with full pay before breaking up for the university holidays. In fact, he would also carry some annual leave over to the following term as well!

If the same waiter returns home from University and picks up a holiday job at an office for five weeks, working five days a week, his holiday job now comes with three days paid holiday.

The new entitlement to the equivalent of 28 days paid annual leave to all workers is rooted in health and safety matters. Safe shift patterns, reasonable leave and sensible hours are necessary and essential. However, these examples I give are hardly sensible and reasonable. What do they have to do with safety?

Aside from these examples, which will be very real for many employers from April, there are other details in this legislation which threaten the notion of fairness in the employer/employee relationship.

An employee’s entitlement to paid annual leave is established at the commencement of the employment. The concession to the employer is that the paid leave can be restricted to one month’s worth at a time, but it is nevertheless an entitlement in advance from the first hour of employment.

That in itself is not entirely unreasonable, although I raised an eyebrow at the section of the ACAS guidelines on the Working Time Directive that spelled out the calculations for paying paid annual leave to a worker who leaves after three days!

My issue with the entitlement in advance relates more to the fact that at the end of the employment it is likely the employee will be owed holiday, or have exceeded their entitlement to that date. It seems to me then sensible that the necessary adjustments are automatically made in the final month or weeks pay. If the employee has paid leave due then they would receive the financial equivalent, whereas if they have taken more than their entitlement there would be an appropriate reduction.

The reality is that the employer must make payment in lieu of leave not taken, which is of course quite right. However, case law dictates that the employer does not enjoy the same reciprocal right if the circumstances are reversed.

An employer can only recover the excess money paid if express provision is made via a “relevant agreement”. That agreement needs to be a collective agreement or any other legally enforceable written agreement between the worker and the employer. It seems so obvious to me that this simple reckoning up process should just be a simple right to both parties.

Similarly, any part days owed at any time can be rounded up in favour of the employee, but not rounded down in favour of the employer. This is an imbalance. Surely a fairer system would be to work to the nearest half or full day!

Paid annual leave is also accrued whilst an employee is absent from work. That absence might be something like maternity leave or long term sickness. Provision must be made for those who are absent from work for long periods, but that provision must not place an unreasonable burden on the employer, and if necessary should be the responsibility of the State.

Someone on maternity leave from 1st January to 30th September returns to work on 1stOctober and in the remaining 13 weeks of the calendar year is entitled to more than two days paid annual leave per week.

Employment rights must continue throughout the period of maternity leave, but having organised cover for the leave period, this amount of annual leave due upon the return to work is bound to have additional impact on the organisation. Previously the employer could make payment in lieu of the annual leave due, but that is no longer allowed under the new legislation.

For the worker on long term sick leave the annual leave entitlement can also be carried over from one leave year to the next. A worker who breaks his leg playing football, without having used any of his annual entitlement, and has complications which keep him off until the end of the year, returns to work the following year and is entitled to 56 days annual leave – more than 1 day a week!

Of course we must have systems in place to protect injured employees, but this is another example of the legislation providing for the employee at the expense of the employer.

Overall this new legislation reflects our society’s increasing notion of entitlement, but we must remember that individual rights are the nemesis of personal responsibility. The entitlement mentality discourages employee pro-activity, which hurts businesses. This trend must be resisted at all costs, as it threatens entrepreneurialism and endeavour, which are major forces for good in our economy.