Last reviewed 15 May 2012

Recent cases have provided useful guidance for education institutions about two difficult annual leave issues: the statutory holiday right of teaching staff; and the calculation of holiday pay for term-time staff. In this article, Sarah Beeby of SNR Denton UK LLP looks at the cases in question and the implications for the sector.

Russell and Others v Transocean International Resources Ltd and Others [2011] UKSC 57

The Supreme Court has confirmed that employees whose contract to work only applies to particular periods of the year can be required to take their annual leave during the times at which they are not required to work.

In Russell and Others v Transocean International Resources Ltd and Others [2011] UKSC 57, offshore oil rig workers contended that the Working Time Regulations (WTR) 1998 required their employers to allow them to take four weeks' annual leave during the period they were required to be offshore. This was instead of taking annual leave during the period they called their “field break”, when they were back onshore resting. Their working arrangement consisted of two weeks on the oil rig, working 12-hour shifts, followed by two weeks' break onshore. While onshore resting, the employees were not bound to perform any duties. Other than some minor work commitments, the employees were free to do as they pleased for a total of 26 weeks every year.

The workers argued that annual leave, properly interpreted, means that an employee is released from what would otherwise have been a duty to work. Therefore, leave could not be taken out of the periods when they were onshore because they were not required by their contracts to work during these periods. The employers argued that the time the employees spent onshore not working satisfied the requirements for annual leave. As the time spent onshore during breaks was significantly longer than the minimum four weeks required under the legislation, there was no need for the employees to take annual leave during offshore working time.

The Supreme Court found for the employers. It held there is nothing in European law or in the WTR suggesting that a pre-ordained rest period when the worker is free from all duties to the employer cannot be taken as annual leave. Annual leave did not have to be taken during a period when an employee was obliged to attend his normal workplace and perform normal duties. As long as there was a period of time when a worker was not performing his normal duties, this met the requirements for annual leave. The Supreme Court decided that the first two days of each period of onshore rest was compensatory rest; this was to make up for the fact the employees worked a 12-hour shift every day during their two weeks offshore. The Court refused a request to make a reference to the European Court of Justice for this issue to be determined.

Implications for educational institutions

In his judgment in this case, Lord Hope recognised certain similarities with the education sector, saying that “… for others, such as teachers and others who work in the education sector, the working pattern has to take account of the fact that the organisation for which they work is open for some periods of the year and is closed for others”.

The decision offers reassurance to the education sector, as it suggests that educational establishments can insist on their teaching staff taking annual leave during the students' holidays, as opposed to when they are required to teach. Like teaching staff, who are often not obliged to work during students' holidays, the oil workers were only obliged to work at certain periods of the year. Had this decision gone the other way, the education sector could have become seriously burdened with the cost and administrative issues associated with allowing teachers to take their annual leave during term time.

However, if employees' contracts contain a clause stating that the employee can take their holiday at any time, it will be difficult to change this and state that they must take their holiday during periods when the establishment is closed. A further issue arises in relation to work performed during students' holidays. For example, it is commonplace for lecturers to be required to undertake research or write articles or books during periods when they are not lecturing. Therefore, in these circumstances, it may be difficult for an institution to identify the periods when the lecturer is not obliged to do any work. Thought should be given to this issue and to how the institution can address it when revising working time and annual leave policies.

Gee and Others v Haberdasher's Aske's Boys' School [2012] ET/3304122/10, 3304123/10 and 3304125/10

In Gee and Others v Haberdasher's Aske's Boys' School [2012] ET/3304122/10, 3304123/10 and 3304125/10, an employment tribunal held that the hourly rate of visiting teaching staff, which was based on an annual rate of pay for full-time teaching staff, included statutory holiday pay. The visiting teachers' pay referred to the number of hours that they worked each term. Since the full-time teachers' annual rate of pay included an element of holiday pay, so did an hourly rate which was drawn from that.

This case concerned visiting music teachers at a school. They taught for a certain number of direct contact hours during term time only, on permanent contracts, and they were on leave for 22 weeks of the year. They were paid monthly throughout the whole calendar year. Between 2000 and 2010, the teachers had various discussions with the school claiming that they had not received holiday pay for the 22 weeks of each year that they were on leave. They understood that holiday pay could be absorbed into their hourly rate, but argued that this rate had not increased when the Working Time Regulations (WTR) 1998 came into force. They argued that it should have done so, in order to reflect an element of holiday pay. Under the WTR, annual leave is paid at the rate of a week's pay for each week's holiday.

The tribunal found a link between what the music teachers were paid and the annual rate paid to full-time teachers, which covered both work time and holiday time. On this basis, it held that they were paid holiday pay as part of their annual salary. Their hourly rate was directly gained from an annual rate paid to full-time teachers and this annual rate reflected work time as well as holiday time. The result was that the teachers were being paid holiday pay during periods of annual leave regardless of whether they worked in that particular month.

Implications for term-time only workers

Calculating holiday entitlement, and how it should be paid for those with atypical working patterns, such as term-time teaching staff, has always been problematic. The guidance for term-time workers is still under review. In this case, the school was able to clearly show, with well-documented evidence and calculations, that the atypical workers had received holiday pay. It is, therefore, essential that education institutions with term-time teaching staff review their current arrangements to ensure they have arrangements for paying holiday pay to these staff that are clear, transparent and specified at the outset.