ET failed to apply correct test when considering carry-over of annual leave during Covid

The Employment Appeal Tribunal (EAT), in the case of Knight v Off Broadway Ltd, had to consider if the Employment Tribunal (ET) had correctly approached the question of whether the claimant could have taken annual leave in the year it was accrued or if, because of Covid, it was not reasonably practicable.

Facts:

The bar, where the claimant was manager, closed due to the Covid-19 restrictions from 26 March 2020 to 3 July 2020. During this time, it traded as a takeaway by serving food through its window. The claimant ran the takeaway as all the other staff were furloughed.

Once the bar reopened and the staff returned, it had to trade under different rules which related to the number of customers allowed and whether food was required. There was also a curfew in place for a time. The respondent became aware that the bar had remained open past this curfew on one occasion. The respondent decided to dismiss all staff because they had all been involved in the breach of this curfew and so sent them an email informing them that they were instantly dismissed. In this email the respondent offered employees the opportunity to attend a disciplinary hearing after they had already been dismissed. Whilst two employees asked for a hearing, the claimant did not.

The claimant brought claims of unfair dismissal, wrongful dismissal (failure to give contractual notice), and accrued but unpaid holiday pay including a claim that holiday pay from the 2019/2020 holiday leave year should have been carried over to the next leave year (the holiday year ran from 1 October to 30 September) and then paid upon the claimant’s dismissal.

In relation to the holiday pay claim, the claimant argued that they had not been able to take all of their holiday because of the impact of Covid-19. The claimant sought to rely upon amendments that were made to the Working Time Regulations 1998 during the pandemic which allowed employees to take annual leave into the next holiday leave year when it was not reasonably practicable for them to take it because of Covid. This amendment was removed from 1 January 2024 and workers had until 31 March 2024 to take any leave that they had carried over because of this temporary change in the law.  

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Employment Tribunal:

The ET found that because of unfairness in the investigation and procedure the dismissal was unfair. However, it was held that there was an 80% chance that the claimant would have been dismissed anyway had a proper procedure been followed by the respondent. The ET also found that the claimant was guilty of blameworthy conduct because they allowed customers to remain on the premises in breach of the curfew.

In relation to the holiday claim, the ET held that the claimant worked flexibly as bar manager and had the opportunity to take holidays from work when they wished to do so. The claimant organised the roster and could have taken days off as holiday. The ET found that from 1 October 2019 to late March 2020 the claimant had the opportunity to take holiday. Whilst there might have been some weeks when the takeaway service was being set up when it would not have been reasonably practicable to take holiday, in other weeks the ET found that the claimant could have taken holiday.

The ET found that there was not enough evidence that coronavirus interfered with the claimant’s ability to take holiday for the Working Time (Coronavirus)(Amendment) Regulations 2020 to apply. This claim was, therefore, dismissed.

Employment Appeal Tribunal:

The EAT had to consider whether the ET had correctly concluded that the claimant was not entitled to carry over any accrued but unused holiday entitlement from the holiday year 2019/2020.

The EAT held that because of the European Court of Justice case, Max Planck Gesellschaft v Shimizu, the employer is required to ensure that the worker is actually in a position to take the paid annual leave to which they are entitled by encouraging them “formally if need be” to do so, while “informing” them in good time that leave not taken during the holiday year will be lost.

The EAT found that the ET in this case relied on the fact that the claimant was free to organise their own holidays and had the opportunity to do so. The EAT held that the ET failed to engage with, and make a finding about, whether the respondent fulfilled their duty that arises from the Shimizu case.

The case has, therefore, been remitted back to the same tribunal for this to be considered.