Comment: Investing in working less

I once managed a large group of engineers developing the original ink jet technology. Several of the team seemed to always be in their lab before I got in at 8am and were still there at 8pm when I left. So, one night I came back in the early hours. There I discovered one still working and several others in sleeping bags stretched out on the sofas in the coffee area. It took me a few days to persuade them to go home when I did, but as a precaution I locked the lab on my departure.

Whilst many employees often find it difficult to take holidays due to business, personal or other reasons, employers in most countries of the world are still under the obligation to offer their employees annual leave, either under statutory provisions, collectively or individually agreed provisions, or based on established company practice. But what happens where an employee refuses to take their holiday? How far can an employer pressure them to take it (without taking away the keys), and who decides on how and when it is to be used?

In the European Union (EU), the Working Time Directive 88 of 2003 (WTD) requires that employees enjoy at least 4 weeks’ paid annual leave per year. That is a health and safety measure and, even though EU member states are allowed to derogate from certain provisions of the WTD, no derogation is permitted from Article 7 on annual leave. Furthermore, the Directive explicitly states that annual leave may not be replaced by a payment in lieu, except for those employees leaving the company who have accrued leave rights during the year of their departure.

In two European Court of Justice (ECJ) cases (Kreuziger v. Berlin and Max-Planck-Gesellschaft v. Shimuzu), the court found that national courts must not allow the loss of accrued annual leave – at the end of the leave year or on termination – simply because the employee did not actually take it. An employer would have to clearly show that they had facilitated it and communicated the need to take it.

In a further ECJ ruling last November, it was once again held that, even though employers are not – stricto senso – under the obligation to force employees to take their statutory annual leave, they need to ensure (and be able to prove) that employees are given the opportunity to take such leave. Therefore, it would seem to suffice that EU employers encourage their employees to apply for the holiday to which they are entitled and notify them that if they do not take their leave within a given period, it may be lost (Sebastian W. Kreuziger v Land Berlin, Case C‑619/16).

As we have already pointed out, however, the ECJ is wrong in finding that statutory vacation rights need not be enforced by the employer, since the Directive’s objective is primarily “the improvement of workers’ safety, hygiene and health at work”. In the words of the ECJ itself, “a Member State which […] provides that the workers are entitled to certain rights to rest and which […] indicates that the employer is nevertheless not required to ensure that the workers actually exercise such rights, does not guarantee compliance with the minimum requirements” (Case C‑484/04). This is recognised at least in the UK’s working time regulations, which state that annual leave (four weeks as defined in the WTD) “may only be taken in the leave year in respect of which it is due”.

But even though holiday rights are guaranteed by the WTD, there are various instances where individual member states have not properly implemented the relevant provisions. For instance, holiday carryover rights granted to employees in Italy, Germany and Hungary, and the subsequent automatic forfeiture of unused leave, are in contravention of the spirit of the Directive. Especially in the case of Italy, where the right to holidays is safeguarded under the Constitution in an absolute way, there should be no facility for holidays not taken in a given year to be automatically forfeited. As such, insurance companies are already offered a ground on which to deny covering an employment accident claim, not to mention that where an employee does not take their full holiday entitlement, they could sue the employer by claiming that work-related pressure prevented them from taking holidays.

In many countries employers may be enforcing leave, but in the way that legislators probably did not intend. For instance, the Australian National Employment Standards (NES) grant employees a minimum of four weeks’ paid annual leave. However, under the NES, employers in Australia may direct employees to take their leave during a business shutdown or where the employee concerned has accrued excess annual leave, provided such direction is “reasonable” and given that the relevant modern award, registered agreement, company practice, or individual terms and conditions of employment allow them to do so. In the USA, “forced vacation” during business shutdowns is so common that it has become standard practice in certain industries.

It should also be noted that by dictating when paid leave is taken, employers not only preserve the proper functioning of the business – as they regulate how many people are absent at one time and for how long – but at the same time minimise workplace stress through overwork. However, the control of holidays is only part of the story, as the problem with overwork as a health and safety issue in Japan has been largely about the level of overtime that has been worked and not the holidays taken – an issue only now being tackled through legislation that still leaves much scope for Karōshi to be a constant threat.

The problem with taking paid holidays can also arise because none are catered for by the law (or its practical application), as often is the case with self-employment and seasonal/casual/zero-hours contract employees. The rise of the gig economy is allowing companies to sidestep the problem of enforcing holidays at all.

However, someone employed on a casual basis is no less employed than a regular employee, and a considerable amount of case law is developing to back this up. The main problem is that casual workers are often unaware of their rights, do not want to risk being blacklisted for claiming holiday entitlements, or are in the “informal economy” and cannot risk being found to have avoided tax or social security obligations. Nevertheless, the ECJ has established that the provisions of the WTD on paid holidays may also cover zero-hour workers (Joined Cases C-229/11 and C-230/11). Likewise, in a landmark decision of the Federal Court of Australia, it was held that a casual truck driver was entitled to annual leave. Furthermore, on the European continent and elsewhere in the world, there is a growing tendency by courts to treat the so-called “contractors” as de facto employees, hence granting them the rights enjoyed by regular employees. This includes the rights and obligations attached to annual leave.

So how seriously should we take the issue of workers actually taking their annual leave, or some leave – if not entitled to it as a statutory/collective right? There are many countries, such as Cambodia, where public holidays currently grant extensive holiday rights in addition to any individual leave, and most workers take this time off as their workplace will often close down on such days. The need for leave is important, not just because it is a health and safety issue, but because employers wish people working for them to regard work with enthusiasm, not as a drudgery. It is also important because in our common automated futures, the “leisure society” will require everyone to develop other interests as they work less hours. If they are too much wedded to work, then its absence could lead to a greater economic and social depression, and a Luddite backlash against technology itself.

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