Daniel Barnett's Latest - 13 April
ECJ Holiday Pay Decision6 April 2006
The ECJ has, this morning (Thurs), handed down its decision in Federatie Nederlandse Vakbeweging v Staat der Nederlanden.
It is authority for the proposition that:
* the ECJ TUPE case of Henke v Gemeide Schierke and
Verwaltuingsgemeinschaft Brocken remains the most unpronounceable
case name out there, but only just (do feel free to challenge me
on this!); and,
* more importantly, it is unlawful for EU states to allow
employers to replace the minimum four weeks' paid holiday with pay
in lieu, even when the holiday year has expired and the holiday
allowance carries over into the following year.
Under the Netherlands' civil code, employers must provide four
weeks' paid holiday leave each year. However, if the employee does
not take the holiday, employers are permitted to roll it over into
the next year and pay compensation in lieu (provided they allow
the employee to have their full four week entitlement in that,
subsequent, year).
The ECJ has ruled that this practice is contrary to Article 7(2)
of the Working Time Directive, which requires Member States to
ensure that every worker is allowed four weeks' paid annual leave,
and that this annual leave may not be replaced by a payment in
lieu (except after termination of employment).
The ECJ's reasoning is, essentially, that permitting pay in lieu
for untaken holiday entitlement in subsequent years might provide
an incentive for employees, incompatible with the objectives of
the Directive, not to take their full leave entitlement (which is
an important health & safety measure) during the year.
Federatie Nederlandse Vakbeweging v Staat der Nederlanden
ECJ Judgment
Employment Agency Contracts
6 April 2006
It's not strictly employment law, but a lot of employment lawyers
will find this case useful. It's good news for those who advise
employment agencies...
The Court of Appeal has allowed an employment agency's second-tier
appeal in Euro London Appointments Ltd v Claessens International
Ltd.
The case is authority for the proposition that a clause making
partial refunds against an employment agency's fees, in respect of
permanent staff whose employment ends within 12 weeks of
commencement, conditional on the client discharging the agency's
fees within seven days is not an unlawful penalty (and therefore
void).
The agency brought a summary judgment application for unpaid fees,
in respect of two workers who had left their employment within a
few weeks. The client admitted liability for part of the fees, but
relied on a contractual term stating that it could have an 80% and
40% refund respectively, as the employees had been left employment
within a few weeks of starting.
The agency responded by relying on another term, providing that
the refund was only available if its fees were paid within seven
days (which they had not been). The client responded, in turn,
that the term was a penalty and should not be enforced. The
District Judge and the Circuit Judge both accepted that the clause
was a disguised penalty. The Court of Appeal reversed these
decisions, and held that the clause making the refund conditional
on payment within seven days was not a penalty.
The decision is complicated. The essence of the Court's reasoning
(Chadwick LJ giving the leading judgment) is that the clause was
simply a condition precedent to exercising the right to a refund,
and was not a measure of damages (whether grossly disproportionate
or not) for breach of contract.
Euro London Appointments Ltd v Claessens International Ltd
BAILII Judgment
Law Society Handbook on Employment Law
by Daniel Barnett and Henry Scrope
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