Written by Brabners LLP
What has happened?
On 29 November 2022, in advance of further strikes proposed by Royal Mail staff, the Chief People Officer at Royal Mail was reported to have issued a communication to employees to say that annual leave would not accrue during periods of unpaid absence such as career breaks, unpaid special leave, unauthorised absence or industrial action.
What is the legal position on holiday accrual?
If employees are on strike, they will normally remain employed throughout the industrial action but their employer does not need to pay them for the days when they are not working.
The next question, then, is whether employees still accrue holidays when they are not working owing to industrial action.
Under the Working Time Regulations 1998 (“WTR”), employees have a statutory entitlement to at least 5.6 weeks of annual leave per year.
Although the matter of holiday accrual during periods of strike action is not expressly dealt with in the legislation, it is generally understood that an individual will continue to accrue statutory annual leave while on strike (or other unpaid leave) as long as their contract is not terminated and they remain an employee. This interpretation is supported by the recent (and controversial) Harpur Trust case, in which the Supreme Court ruled that even if an employee does not do any work, they remain entitled to 5.6 weeks’ statutory holiday per year for as long as their contract of employment continues.
Where the situation gets trickier is in regard to any additional contractual holiday entitlement above the statutory 5.6 weeks, for example if the employee is entitled to 25 days plus bank holidays (33 days in total). On the face of it, as long as the employee retains their statutory minimum holiday allowance (5.6 weeks or 28 days per year for a full-time employee), then whether additional contractual holiday continues to accrue during periods of strike action will depend entirely on the wording of the employment contract.
That said, docking contractual holiday from striking employees is likely to exacerbate what will already be a strained employment relationship. It could potentially amount to a breach of the implied term of mutual trust and confidence, entitling an affected employee to resign and claim constructive dismissal (although there is an argument that a striking employee is themselves in breach of contract by refusing to do the work they are employed to do and therefore cannot rely on their employer’s breach of trust and confidence to bring a constructive dismissal claim).
Additionally, workers have the right not to be subjected to a detriment for taking part in trade union activities, and docking an employee’s contractual holiday undoubtedly amounts to a detriment. However, the Court of Appeal recently ruled that “trade union activities” in this context does not include industrial action, meaning on the face of it that employers are not prevented from subjecting employees to a detriment for going on strike (although they are generally prevented from dismissing them).
Other considerations
Another issue for employers and umbrella companies to consider is the need to separate those employees who are taking part in a strike from those who are absent from work for other reasons, for example, sick leave or family leave. A reduction in holiday entitlement for employees who are absent from work for reasons such as maternity leave could lead to them bringing claims for unlawful deductions from wages, breach of contract or even discrimination.
Whilst industrial action understandably presents a headache for employers, they should avoid knee-jerk reactions and consider their legal responsibilities carefully before treating striking employees detrimentally.
This bulletin is for general guidance purposes only and should not be used for any other purpose.
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