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Sun, Sand and Annual Leave

Written by Jim Roberts and Sarah Holderness on October 22nd, 2014.

The warmer weather is here, bringing with it the desire to take time away from work to enjoy the sunshine.  But what are employees entitled to?  How much annual leave does an employee have and when is an employee entitled to take time off?
 
How much annual leave?
 
After 12 months of continuous employment, employees are entitled to a minimum of 4 weeks’ paid annual leave (termed ‘annual holidays’ under the Holidays Act 2003).  A generous employment agreement may provide for more, but as 4 weeks’ is a statutory minimum, it cannot lawfully be less.
 
When can you take annual leave?
 
Employers must allow their employees to take annual leave within 12 months after the date on which each employee’s entitlement to the leave arose.  Nonetheless, when in that period the annual leave is actually taken is to be agreed between the employer and employee.  An employer is not entitled to unreasonably withhold their consent to an annual leave request.  But, if the parties reach an impasse, the employer may require the employee, on not less than 14 days’ notice, to take their annual leave at a particular time nominated by the employer.
 
Note that employers may have a period in each year – termed a “closedown” – during which they customarily close either all or part of their operations, discontinuing the work of one or more of their employees and requiring those employees to take some or all of their annual leave.  A typical closedown is over Christmas.  An employer may, on not less than 14 days’ notice, require its employees to take annual leave during the closedown period, regardless of whether the employees want to do so.  If an employee has insufficient annual leave, with the employer’s agreement, the employee may take some of the closedown period as annual leave in advance.  However, the default position is that the employee only get paid for the leave that is due.
 
When an employer and employee fall out – Dearsly v Encore Designer Seconds Ltd
 
This recent case illustrates when it is reasonable for an employer to decline an annual leave request, despite the (former) employee’s views to the contrary.
 
Ms Dearsly worked for Encore.  In September 2013, Encore emailed all staff indicating annual leave was going to be harder to approve than it had been previously because it needed to carefully manage cash flow. It also advised that annual leave would not be granted over the period 27 December 2013 to 3 January 2014 (because the owner was taking her first holiday in ten years).
 
Despite this, Ms Dearsly then asked for annual leave on 31 December 2013 to allow her to supervise her son over New Year’s Eve.  Encore reluctantly made an exception and granted her leave request.  Ms Dearsly then later asked for annual leave on 27 and 30 December 2013 as well.  Encore, surprised given its previous advice to staff, turned her request down.
 
Ms Dearsly threatened to resign if Encore did not change its mind.  Encore refused, again explaining it did not suit the business to have staff away during the 27 December to 3 January period.  So Ms Dearsly resigned and claimed constructive dismissal on the basis that Encore fundamentally breached her employment agreement by unreasonably refusing to grant her request for annual leave.
 
The Authority rejected the former employee’s claim; there was no unreasonable withholding of consent. It found there was genuine commercial justification behind Encore’s decision, and Encore’s owner had compelling personal reasons for not cancelling her own longstanding leave arrangements to cover for Ms Dearsly.  Encore had offered Ms Dearsly alternatives and explained the reasons for declining her request to her. Encore was simply managing its business in accordance with its needs and with what had been consistently communicated to staff over many months.
 
In our view
 
We recommend that employers clearly set out annual leave entitlements and requirements in each employee’s employment agreement or in a policy.
 
Employees cannot and should not expect that any and all annual leave requests will inevitably be granted.  Employers are entitled to take into account their operational and financial needs in responding to such requests.  If declining annual leave, the best and safest practice for employers from a ‘good faith’ perspective is to provide a summary of the reasons and those needs - if not already clearly indicated.
 
It’s always important for employers and employees to understand their obligations with respect to annual leave, particularly as the holiday season approaches.  The Hesketh Henry Employment Team can help with any queries relating to annual leave as well as with drafting or reviewing employment agreements or leave policies.
 
Topics: Employment Law
 
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