Case No: EATRF 1999/0346/A1
 
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 21st June, 2000

B e f o r e :

LORD JUSTICE PILL
LORD JUSTICE BROOKE
and 
LORD JUSTICE MUMMERY
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	THE EAST RIDING OF YORKSHIRE COUNCIL		Appellant	
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	MRS LORRAINE GIBSON	Respondent	

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(Transcript of the Handed Down Judgment of
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Mr John Bowers QC & Mr Jeremy Lewis (instructed by  Head of Legal Services, East Riding of Yorkshire Council for the Appellant)
Mr Jeremy McMullen QC & Miss Jennifer Eady (instructed by  Adam Creme, Director of Legal Services, Unison for the Respondent)

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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Mummery:

	Introduction

	The only question on this appeal is whether the Employment Tribunal sitting at Hull erred in law when it held, on dismissing the complaint by Mrs Lorraine Gibson against the East Riding of Yorkshire Council (the Council), that Article 7 of the Working Time Directive (93/104/EC) (the Directive) relating to minimum annual leave does not have direct effect. The Employment Appeal Tribunal took a different view when it allowed Mrs Gibson’s appeal on 29 January  1999 and held that she was entitled to four weeks paid leave under her contract.

	Despite this difference of judicial opinion neither side has contended on this appeal by the Council  that it is necessary to seek a ruling from the European Court of Justice on the  interpretation of Article 7 of the Directive in order to determine Mrs Gibson’s complaint. 

	The Facts.

	Mrs Gibson is employed as a part time swimming instructor at Haltemprice Leisure Centre, Anlaby, Hull. She works 11.5 hours a week under that contract. She works under a separate contract for 14 hours a week during term time as a school swimming instructor. She is paid an hourly rate. Neither contract entitles her to annual leave. Clause 12 of the school instructor contract expressly states “There is no annual leave entitlement attached to this post.” She has never been paid any holiday pay.

	From 31 July 1986 until 1 April 1996 her employer was the Beverley Borough Council. As a result of local government re-organisation with effect from 1 April 1996 the Council  became and remains  her employer.

	The Proceedings
	On 14 July 1997 Mrs Gibson presented a complaint to the tribunal that the Council had failed to supply her with a proper statement of the terms and conditions of her employment under section 11 of the Employment Rights Act 1996. She also sought redress for unauthorised deductions from her wages under section 13 of the 1996 Act on the basis that she had not received payments for annual leave. 

	The only remaining issue on the section 11 claim is entitlement to annual leave. Its resolution depends solely  on whether Article 7 is directly effective against the Council. The  claim cannot  be based on contract. Neither contract provides for annual leave. There was no legislation in force in the United Kingdom at the material time entitling Mrs Gibson or other workers to annual leave or holidays. There was no evidence before the Employment Tribunal of national practice or custom, nor any finding of fact by that tribunal as to the conditions for entitlement to and the granting of annual leave or holidays.

	The Working Time Regulations 1998 (SI 1998 No 1833) (the Regulations), which are the implementing measures  relating to the organisation of working time in the United Kingdom, now prescribe the conditions under which entitlement to paid annual leave arises. The Regulations were made on 30 July 1998. They came into force on 1 October 1998. Mrs Gibson contends that Article 7 of the Directive, which should have been implemented by member states by 23 November 1996, can be relied on by her in the Employment  Tribunal as directly effective  against the Council in respect of the period 23 November 1996 to 1 October 1998.

	It is agreed that the Council  is an emanation of the state; that Mrs Gibson is a “worker” within the meaning of the Directive; and that, if  Article 7 has direct effect, it would follow that (a) the Council would not be  entitled to plead, as against Mrs Gibson, the failure of the state to perform its own obligation to adopt implementing measures within the prescribed period and (b) the Article would be enforceable in proceedings against the Council by  Mrs Gibson in the Employment Tribunal.

	Article 7 provides that

“ (1) 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.

(2) The minimum period of paid annual leave may not be replaced by allowance in lieu, except where the employment relationship is terminated.”
	
	The contention that that provision has direct effect was rejected by the Employment Tribunal in its extended reasons sent to the parties on 23 July 1998. But it was accepted by the Employment Appeal Tribunal which allowed Mrs Gibson’s appeal on 29 January 1999. It held that she was entitled to four weeks annual paid leave. The judgment of the Appeal Tribunal given by Morison J is reported at [1999] ICR 622.

	The Legal Principles

	There is no dispute about the relevant principles for determining whether an article in a directive is directly effective in the courts and tribunals of member states. Morison J set them out in a valuable exposition on pages 627C-628 G. It is unnecessary to repeat the entire passage, as the arguments on this appeal have focused only on the following  principles:-

	(1)	 A provision of  a directive may have direct effect in member states if it is unconditional and sufficiently precise. This is a matter of interpretation of the relevant provision in the context of the whole directive, having regard, in particular, to its purpose. It is necessary to examine the nature, general scheme and wording of the provision in question .

	(2)	A provision of a directive is sufficiently precise, even if it would require the Court of Justice to  answer a difficult question on its interpretation.

	(3)	In the employment field a provision in a directive is sufficiently precise if it identifies (a) the beneficiaries of the right; (b) the persons under a duty to give effect  to the right; and (c) the nature and extent, or content, of the right.

	(4)	 The fact that the directive permits precise derogations from its terms by member states does not of itself render the directive conditional. A provision is unconditional if there is no need for further action by Community institutions or by member states in order to define its content.

 	(5)	The fact that some articles of a directive may lack sufficient precision and  be incapable of having direct effect does not prevent others which are  sufficiently precise  from having direct effect standing on their own.

	Application of the Principles.
	The difficulties in the application of the legal principles to this case were recognised by the Appeal Tribunal which, on reversing the decision of the Employment Tribunal, stated at page 628G that

“ There is much to be said in favour of the conclusion reached by the industrial tribunal.”

	The Appeal Tribunal stated no less than five arguments  against the direct effect of  the Directive ( p.628 G-629C)-

“In the first place, Directive 93/104 permits national governments to give effect to its terms through the collective bargaining process, as an alternative to the normal legislative process. Second, extensive derogations are permitted under article 17, and an undefined discretion to provide “appropriate protection” in lieu, in cases to which article 17 (2) applies. Third, derogations are permitted “by means of collective agreements.” Fourth, the English text of the Directive suggests that article 2 (1) which defines working time was not drafted with the precision to be expected of a Directive which is capable of conferring rights on certain categories of workers. The lack of clarity has prompted a reference from a Spanish tribunal to the Court of Justice seeking the court’s guidance as to the proper interpretation of that definition. Fifth, articles 10,16,18 (3) and (4) permit (“may”) member states “to make the work of certain categories of night workers subject to certain guarantees,” to lay down reference periods, to lay down rules to be applied in the collective bargaining process, and give them an option to extend the reference periods. This shows, it may be argued, that the Directive cannot be seeking to harmonise the laws of member states by introducing minimum standards.”  

	Nevertheless the Appeal Tribunal concluded that “on balance,....article 7 has direct effect so that during the period from 23 November 1996 to 1 October 1998 an employee of an emanation of the state may take advantage of its protection” (p.629C) and that
“ the structure of the Directive is consistent with it having direct effect. It is designed to require member states to confer minimum rights upon workers in a way which can be said to be unconditional”

(p.629H.)

	The essence of the reasoning of the Appeal Tribunal is in the following passage at page 630 A-C in which the EAT responded to specific objections to direct effect in these circumstances:-

“ Article 7 is clear and precise and, in our view, admits of no ambiguity or conditionality. In the lay members’ experience, custom and practice in the workplace will invariably fill the gap if there were doubts as to the start and end of a “leave year.” It may well be that the employers have a defined leave year, which would be appropriately applicable to the applicant. No derogations are permitted from the article. It applies to all workers, both private and public, other than those engaged in the sectors stipulated in article 1(3). It gives effect to paragraph 8 of the Community Charter of the Fundamental Social Rights of Workers adopted by the European Council on 10 December 1989. It also gives effect to the purpose of the Directive which insists (“must”) that Community workers be granted minimum annual periods of rest.”

	Conclusion

	I disagree with the conclusion of the Appeal Tribunal. In my judgment the provisions of Article 7 are not sufficiently precise to have direct effect. The Employment Tribunal rightly rejected Mrs Gibson’s claim. I would allow the Council’s appeal.

	(1)	 The Wider Context.
 
	I agree that, although this case is only concerned with the interpretation of Article 7, it is necessary to examine it in the wider context of the nature, general scheme and wording of the  Directive.

	The Directive concerns “certain aspects of the organisation of working time.”

	The preambles to the Directive refer to Article 118a of the Treaty according to which “the Council shall adopt, by means of directives, minimum requirements for encouraging improvements, especially in the working environment, to ensure a better level of protection of the safety and health of workers” and quote the  Community Charter of the Fundamental Social Rights of Workers (9 December 1989) in which it was declared that

“8. Every worker in the European Community shall have a right to...annual paid leave, the duration of which must be progressively harmonised in accordance with national practices.”

	The preambles  recognise the need  to provide for “ flexibility in the application  of certain provisions of this Directive whilst ensuring compliance with the principles of protecting the safety and health of workers ” and the need “ to provide that certain provisions may be subject to derogations implemented, according to the case, by the member states or the two sides of industry...”

 	The purpose of the Directive is to lay down

“....minimum safety and health requirements for the organisation of working time.”

	That is stated in Article 1 of Section I  of the Directive on “Scope and Definitions” which applies to minimum periods of annual leave as well as to minimum periods of daily and weekly rest, to breaks, to maximium weekly working time and to certain aspects of night work, shift work and patterns of work.

	Article 2 contains the following definition of “working time.”

“....any period during which the worker is working, at the employer’s disposal and carrying out his activity or duties, in accordance with national laws and/or practice;”

	I regard that definition, imprecisely framed and coupled with an  express reference to “ working....in accordance with national laws and/or practice”, as specially important in the context of Section II of the Directive which contains  Article 7 “Annual Leave.” Section II deals with “Minimum Rest Periods-Other aspects of the Organisation of Working Time.”

	Article 17  permits derogations  by Member States from various Articles, but not from Article 7.

	In the “Final Provisions ”in Article 18 it is stated in 1 (a) that

“Member States shall adopt the laws, regulations and administrative provisions necessary to comply with this Directive by 23 November 1996, or shall ensure by that date that the two sides of industry establish the necessary measures by agreement, with Member States being obliged to take any necessary steps to enable them to guarantee at all times that the provisons laid down by this Directive are fulfilled.” 

 	Article 18 1. (b) (ii)  also provides for an option relevant to the length of the  period of annual leave claimed by Mrs Gibson-

“....Member States shall have the option, as regards the application of Article 7, of making use of a transitional period of not more than three years from the date referred to in (a), provided that during that transitional period:

-every worker receives three weeks’ paid annual leave in accordance with the conditions for the entitlement to, and granting of, such leave laid down by national legislation and/or practice,... ”

	(2) 	Insufficiently Precise.

	I agree with the submission of Mr Bowers QC, who appeared on behalf of the Council, that Article 7 does not have direct effect so as to be enforceable by individual workers in national courts against state employers because it leaves unanswered key questions affecting individual entitlement to annual leave.

	In a sense Article 7 is precise: the length of the minimum period of paid annual leave is a precise period of four weeks. But it does not follow from the precision of the length of the period of  leave that the obligation in  the article is sufficiently precise for a national court to enforce it at the instance of an individual without more.

	The first basic question for the national court  is: what is the period  of “working time” for which the worker must have worked before he becomes entitled to annual leave under Article 7?  Annual leave is leave from “working time” . The concept of “working time ” is not precisely defined. To what period of “working time” does the specified period of  annual leave relate? This question is not answered by Article 7 itself or by  any other provisions in the Directive. How then  is  it  possible for a national court to decide which workers are entitled to annual leave?

	The Employment Appeal Tribunal was certainly alive to this substantial  difficulty. It sought to meet it  and to “fill the gaps” by reference to the views and experience of the lay members on the custom and practice in the workplace  in this country as to the start and end of a “leave year.”  

	Mr McMullen QC, on behalf of Mrs Gibson, sought to meet the objection that Article 7 is not sufficiently precise by  invoking  definitions in Articles 3a and 3b of the Framework Directive on Health and Safety (89/391/EEC) of 12 June 1989, which preceded the Directive, and by relying on a purposive construction of the Directive. He contended that the Directive clearly created an unequivocal and precise obligation as to the result to be achieved.It is a “condition-free right.” It applies to every  worker against all employers in all sectors,  both public and private, who organise the working time of their workers. The content of the right is clear and precise: 4 weeks paid annual leave. The absence of  legislation or national practice as to annual leave in the United Kingdom could not be relied on by the Council to take away or cut down the clear and unconditional right to annual leave conferred by the Directive. Article 7 is not conditional either as to the worker who is entitled to annual leave or as to the employer who is liable. The problem of the entitlement of new starters to annual leave is resolved by construction of “week” and “annual”, so that a week’s leave does not become due until 12 weeks have been worked.  In that way a week’s leave accrues every 13 weeks of working time. Further, no derogations from Article 7 are allowed by the Directive. 

	The realistic recognition of the Appeal Tribunal that there are gaps to be filled is significant on the issue of the direct effect of Article 7. The very existence of gaps in Article 7, even as viewed in the “wider context” set out above, is a strong indication that the terms of  the Article are  insufficiently precise to have direct effect in the courts and tribunals of member states. The right which Mrs Gibson wishes to assert against the Council is  quite simply not sufficiently defined in Article 7 to be directly enforceable by an individual in national courts and tribunals. Further definition is necessary in implementing measures either by the Community or by the member state. Without further definition of the conditions for entitlement to the right how could the tribunal  even begin to determine a claim under Article 7 by a worker, who had worked only for a week or for a month, that he was entitled to four weeks annual leave? Mr McMullen’s submissions on interpretation appear to be an impermissible process of judicial legislation. The judicial interpretation of  Article 7 and of the other provisions of the Directive  does not yield  the answer to  basic questions of entitlement.

	If  Article 7 itself is lacking in sufficient precision and if it is not possible to provide sufficient precision by reference to other provisions in the Directive, it is not permissible to interpret the Article as having direct effect  by reference to national  practice or custom in the workplace as perceived by individual members of the Appeal Tribunal. What has to be construed is the  relevant article in the Directive and not the provisions of the national law or practice in individual  member states. Other measures, such as national legislation of the detailed kind now to be found in the Regulations, or  in collective agreements, are required to enact  and define the essential conditions of entitlement to the rights to be  conferred.

	(3)	 The Option in the Transitional Period 

	If , contrary to my view, Article 7 has direct effect, I would agree with the   Appeal Tribunal that Mrs Gibson is entitled to four weeks’ annual paid leave as provided for in Article 7. The Council is not entitled to rely on the option in Article 18 1. (b) (ii) for three weeks’ paid annual leave. The option was  available only for a transitional period of three years from 23 November 1996 and  it was not in fact exercised by the United Kingdom. The Council is not entitled to invoke the benefit of an unexercised option which the state could have exercised if it had taken the measures necessary to implement the Directive , but which is no longer available to the member state.
	I would therefore allow the Council’s appeal and dismiss Mrs Gibson’s claim.
	Lord Justice Brooke :  I agree.
	Lord Justice Pill :
	I agree. There is no doubt that Article 7 of Council Directive 93/104/EC imposes an obligation on member states to ensure that every worker is entitled to paid annual leave of at least four weeks. That obligation is unqualified. The existence of the obligation does not, however, answer the question whether the statement of that obligation in Article 7 creates a right enforceable by an individual in a national court. That depends in this case on whether it creates a right “whose contents can be determined sufficiently precisely on the basis of the provisions of the directive alone” (Francovich v Italian Republic (Cases C-6 and 9/90 [1995] ICR 722).
	In my judgment it does not. Mummery LJ has referred to key questions which are unanswered in the Article. Those include the absence of a precise definition of “working time”, upon which entitlement to leave depends, the absence of criteria to assess entitlement during the first year, or a part year, of employment, or where there is more than one employer or part time work or work on a commission basis. The subject matter, that is paid leave entitlement, requires precision and detail to define its content and the substance of the right.
	It is submitted that a national court may fill the gaps in the absence of such detail. The court should give effect to what Mr McMullen describes as a “pure right” in Article 7. In my judgment that is neither the intention nor the effect of Article 7. It requires national measures to be adopted but it contemplates that the existence of the right to enforce depends on national measures being in place. The nature of the Article is also confirmed by the wording of the second part of Article 7(1); action is to be taken by member states to lay down the conditions for entitlement.
	I agree that the appeal should be allowed. I also agree with Mummery LJ's conclusion under his heading 'The option in the transistional period'.

Order:  Appeal allowed; order of Employment Tribunal reinstated; appellant to have the costs of the appeal, to be the subject of a detailed assessment, but interim payment to be made by the respondent of £8, 000.