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Brexit and the Working Time Directive: an Opportunity for Reform?


The Working Time Regulations (WTR) came into force in the UK in 1998, and have been one of the more contentious aspects of the UK’s relationship with the European Union (EU). The right wing of the Conservative party, and a significant number of employers, were (and still are) opposed to certain aspects of the WTR. Indeed the WTR only became law after the 1997 Labour Government opted back in to the Social Chapter of the Maastricht Treaty.

It is not difficult to appreciate why this is the case: the WTR are notoriously complex, and it is therefore relatively easy for employers to find themselves in breach of the rules, and subsequently facing the prospect of defending costly and time consuming litigation in the Employment Tribunal. They have been interpreted in the European way of giving effect to the purpose of the Directive rather than the strict words of the Directive.

Further, a number of aspects of the WTR are seen by some as placing an unfair cost on businesses. One example is that, it is now the case that compulsory and voluntary overtime, incentive bonuses, and results based commission payments must be included by employers when calculating how much pay workers should receive when taking their 20 days annual WTR holiday (so long as the payments are received regularly enough to amount to “normal remuneration”).

It is easy to understand employers’ opposition to this: from their perspective, the point of a commission scheme is to reward workers who generate high levels of revenue for the business in question. Cleary, when a worker is on holiday, no commission is being earned, yet, under the WTR, he or she must still be rewarded. There is a risk that an employee could ‘game’ their holidays to coincide with a high commission period and be paid much greater holiday pay.

Another controversial aspect of the WTR is the relationship between holiday entitlement and sickness absence, which many employers feel are overly generous, and susceptible to abuse. To use one example, under the WTR, employees who fall ill whilst on holiday are entitled to claim those days back, and take them at a later date. Further, it is now the case that employees continue to accrue their right to WTR holiday whilst on long term sick leave.

So, if a worker is on sick leave for 12 months, and then returns to work, he or she is entitled to carry over that holiday to the next leave year, or, if the worker’s employment is terminated, be paid in lieu of the accrued but unused holiday. It is easy to see how such rules could be abused, and why many employers are opposed to them, particularly when the Directive itself bans the carrying over of holiday leave and the European Courts in effect re-wrote the Directive to give effect to its social purpose.

So, what is the likelihood that some of these concerns might be addressed by the government after Brexit? If the UK doesn’t agree a transition period then after 29 March 2019, the UK will no longer be obliged to comply with the Working Time Directive, and Parliament will have the power to repeal or modify the WTR as it sees fit.

In terms of political appetite for making these changes, a number of prominent Brexiteers including Boris Johnson, Michael Gove, Jacob Rees-Mogg and Liam Fox, have openly expressed their opposition to the WTR in the past. So, depending on the makeup of the government in the months and years after 29 March 2019, we may well see some of the more onerous provisions of the WTR being repealed or amended.

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