Reading the European business news we might get the impression that inflation is a thing of the past as deflationary concerns dominate the headlines. In this article we explore the inflationary effect of European Employment Legislation and conclude that the employment sector at least is one area where fears of deflation and “stagnation” are unwarranted.

The basic principle established by the European Court of Justice (ECJ)in Federacion de Servicios Privados v Tyco Integrated Security is that peripatetic workers are working during time spent travelling from home to their first appointment and back home from their last appointment. The facts in the case of Tyco were that the company installed and maintained security systems throughout various parts of Spain. It closed all its regional offices in 2011 and maintained only a head office in Madrid. The technicians worked from home using a company vehicle to attend work on site. 

Tyco did not treat as working time the journey from home to the first customer or the last journey of the day from the last customer back to home.

The Advocate General gave an opinion around June to the effect that such time should be regarded as working time and the ECJ has followed that opinion.

The Directive defines working time as any periods during which the worker is at work, at the employer’s disposal and carrying out his activities or duties. Clearly in Tyco the third element is met because in travelling to the site he is carrying out his duties. In determining whether the second element is met, the decisive factor is whether or not the worker is required to be physically present at the place determined by the employer and to be available to the employer in order to provide the appropriate service. So far as the first element is concerned whether such a worker is at work, where a worker no longer has a fixed place of work, the worker must be regarded as working during the journey to the first appointment. 

The above is obviously a summary but hopefully it is helpful in trying to understand the impact of this judgment upon the cost of employing employees to certain roles. 

So the consequence of this judgment is that costs will increase certainly in respect of hourly paid workers.

So what about time spent travelling between clients’ homes?

The definition of working time under the Working Time Regulations and Directive should not be confused with the obligation to pay the minimum wage. However, the outcome may amount to the same thing- increased cost. The issue as to whether or not somebody who works for a range of different clients in their homes should be paid at least the minimum wage for time spent between jobs was resolved in Whittlestone v BJ Home Support Limited.

In that case Mrs Whittlestone was employed to provide care services to clients. She was paid hourly on the basis of time spent from the moment of arrival at the home to the moment of departure. Contractually she was not entitled to be paid for time spent travelling between jobs. Mrs Whittlestone was successful on appeal in arguing that time spent travelling between assignments was time work and therefore should be paid.

So here are two cases the effect of which is to extend the number of hours in the day during which employees are entitled to be paid. Not only has the cost of employment increased in this respect but two recent decisions on calculating holiday pay increase the cost to the employer of paid holiday leave under EU legislation.

The Employment Appeal Tribunal (EAT) in Bear Scotland v Fulton held that when calculating holiday pay under the Working Time Directive the employer must take into account overtime payments and the decision of the ECJ in Lock v British Gas that commission payments must be included in holiday pay.

So employees are entitled to payment for more hours during the working day and higher payments when on holiday. In Europe in which economists worry about “stagflation” and the possibility of deflation the inflationary effect of European Employment legislation means that no such worries need trouble us about the cost of labour.

We’re always happy to discuss things further.
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