19/09/2008

Employment e-Brief – Are your employment contracts as good as they might be?

Philip Paget, employment partner

Lawyers will always tell you that it is worth having your employment contracts reviewed on a reasonably regular basis in order to check that they are up to date.  This review ought to include a reasonably detailed discussion the variety of options available to cover certain situations.  As with anything of this nature, what you put into such an exercise will very often dictate what you get out of it.  Recent case law has again emphasised one of the useful little devices that many employers don’t incorporate in their terms and conditions because they just opt for the very basic terms that are available.

The clause in question relates to a requirement that once notice has been given by an employee of resignation, or to an employee by reason of dismissal, then the employer can require the employee to take any remaining holiday during the notice period rather than to be left with having to make a payment in respect of accrued unused holiday.  In these recessional times, every penny counts.

The statutory provision under the Working Time Regulations requires that employers who wish to require employees to take holiday must give notice equivalent to double the amount of time to be taken.  For instance, if there are 4 days holiday accrued unused then the employer must give 8 days notice of the requirement for the employee to take this holiday.

However, this basic statutory provision can be varied by the employment contract because an employment contract is a “relevant agreement” under the Working Time Regulations and it is one of those Regulations which is capable of being varied in this way.  As a consequence if the contract contains such a provision then the notice requirement is not necessary and the employee can be required to take the outstanding holiday immediately. 

This situation was recently reviewed by the EAT in the case of Industry and Commerce Maintenance v Briffa which confirmed that there was nothing wrong with such a situation occurring especially bearing in mind that the purpose behind the Working Time Regulations is to ensure that workers take sufficient holiday with pay. 

Should you require any assistance in reviewing your contracts of employment please do not hesitate to contact a member of the employment team.