When is annual leave not annual leave?

Thursday 5 August, 2021

With the rise of remote working and so many people now owning smartphones and laptops, the line between working and time off has blurred. It is increasingly common for employers to expect workers to be available during evenings, weekends, and while they are on leave. However, a recent Employment Court decision has raised the possibility that time spent working while on annual leave may not actually count as annual leave.

The case concerned an employee who had spent 13 years working for the Wanaka Sun newspaper and for a Wanaka pharmacy. The employee considered them to be family businesses, but both were owned by her husband who fired her when their marriage ended. She was awarded over $70,000 in compensation and holiday pay after the Employment Relations Authority (ERA) found that she had been unjustly dismissed.

Her ex-husband appealed the award to the Employment Court on the basis that the ERA had underestimated the amount of annual leave she had taken, leading to an incorrect calculation of the holiday pay owing. The employee accepted that she had been away from Wanaka for just over 16 weeks in 13 years but considered that this time did not count as annual leave, other than 4 weeks overseas, because she had worked during that time.

The Court referred to the Holidays Act which describes the purpose of annual leave as providing the opportunity for rest and relaxation. The Court considered that employers undermine the benefits of annual leave if they require employees to monitor or respond to emails or calls or perform other work while on leave. Annual leave does not mean just paying holiday pay and allowing employees time away from their workplace, particularly as so many employees are now working remotely. However, the Court distinguished between work that the employer requires the employee to do while on annual leave and work that the employee chooses to do while on annual leave. An employee required to work while on annual leave may be able to claim that they have received their annual leave entitlement. An employee choosing to work when not required to by their employer, or by necessity, cannot.

The Court concluded that the employee in this case had worked while on annual leave, but that most of it was work that she had chosen to do, rather than work she was required to do. The work she was required to carry out amounted to around 10% of her time during a normal working week, so the Court credited her with 10% of the disputed leave.

What does this mean for employers?

Many employees on annual leave choose to periodically check their email or messages so that they do not return to an overloaded inbox. This is unlikely to affect their annual leave entitlement unless there is an expectation from their employer that they do this. However, employers who regularly expect employees to work while on annual leave or to be available for calls or emails should reconsider this practice as it could result in employees being able to claim back part of their annual leave entitlement on the grounds that the time away was not genuinely annual leave.

If you have any concerns about how annual leave is treated in your business, our experts can help.