EU directives offer direction '“ except when they don't

The answer to the question 'Is the UK better in or out of the European Union?' is a political, social and/or economic one and not strictly within the domain of lawyers. However, lawyers are entitled to comment on matters of legislative process and legislative outcome. The quality of law making is very much a matter in which legal practitioners have an interest.

David Ogilvy is a Partner and Head of Employment and Dispute Resolution at Turcan Connell

Directives are the principal mechanism through which EU institutions impose EU jurisprudence upon citizens of member states. The UK Government has an obligation to implement EU directives into UK law and once it has carried out that obligation, the UK legislation applies subject to the judicial institutions of the EU and the interpretation by those institutions of the directive.

Directives are not intended to be prescriptive on matters of detail. They tend to set out principles and values which have to be enacted into the legislation of member states. It is then for a member state to give effect to the directive through its own legislative processes.

This is not without difficulties, well illustrated by the state of the law in the UK on holiday pay. How much pay an employer ought to pay when an employee goes on holiday ought to be clearly set down; employers would know how much holiday pay to budget for and employees would know how much money they had for holidays. Both parties have an interest in certainty. Regrettably, the position turned out to be far from certain to the high cost of many employers.

The directive underlying UK legislation contains the statement “the improvement of workers’ safety, hygiene and health at work is an objective which should not be subordinated to purely economic considerations”. It directs that “member states shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and or practice”. So it says paid leave is important for workers’ health and member states will take measures to ensure every worker is entitled to paid annual leave.

It leaves the laying down of the conditions for entitlement to that leave to national legislation. This creates a clear impression of legislative freedom at national level. The UK laid down a right to a week’s pay in respect of each week of leave.

However, following a number of cases (BA v Williams, Lock v British Gas, Bear Scotland v Fulton), it is clear the payment an employee is entitled to receive under the directive includes commission and overtime. Nowhere is such a right discernible from the directive and, therefore, given that the conditions for entitlement to and granting of such paid leave are matters which the Commission thought best to leave to national legislation, one might have expected the UK’s articulation of the right set out in the directive would prevail.

Not so. Many employers have found themselves in the situation whereby, having paid holiday pay lawfully, as they saw it, and in accordance with UK legislation implementing the directive, they are now facing claims for back pay for commission and overtime which we are told on a true construction of the directive ought to have been paid.

Laws should be clear, otherwise they fail in their purpose.

David Ogilvy is Head of Dispute Resolution & Employment Law, Turcan Connell