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This month we look at a difficult area for employers - what bank holidays are your part-time employees entitled to$%: With two bank holidays in May, the Employment Appeal Tribunal's recent decision in McMenemy v Capita Business Services Limited will be of interest to employers of part-time staff.

Four of the eight bank holidays always fall on a Monday (Easter Monday, May Day, Spring Bank Holiday and August Bank Holiday). One is always on a Friday (Good Friday) and the other three vary from year to year. There has been debate for some time about whether part time employees are eligible for pro-rata time off in lieu of bank holidays where they do not work on a Monday. The basis for this argument is the Part-Time Workers (Prevention of Less Favorable) Treatment Regulations 2000 that make it unlawful to treat a worker less favorably on grounds of his or her part-time status.

In this case, Mr. McMenemy worked three days a week (Wednesday, Thursday and Friday). He claimed that he was being treated less favourably than full-time employees, as he did not get the benefit of bank holidays that fell on a Monday. Under his contract of employment, he was entitled to take paid leave on public holidays where they fell on one of his normal working days. His employer's business operated 7 days a week. This meant that some full-time employees also did not work on Mondays. In fact, Mr. McMenemy's line manager had worked a Tuesday to Saturday shift for some time. During this period, he did not get time off in lieu of bank holidays that fell on a Monday. The Employment Appeal Tribunal held that the reason that Mr. McMenemy did not get time off in lieu of bank holidays that fell on a Monday was not because he was part-time as full-time employees were treated in the same way. Rather, it was because he did not work on a Monday. Mr. McMenemy therefore lost his claim.

This case is likely to be helpful to many employers in the retail, leisure and manufacturing sectors that operate on a 7-day week basis. However, where does it leave employers who operate 5 days a week from Monday to Friday$%:

What are the options for employers who operate 5 days a week$%:

Where an employer operates on a 5-day week basis (Monday to Friday), all full time employees will receive the benefit of bank holidays that fall on a Monday (assuming that their contracts of employment provide for this). A part-time employee who does not work on Mondays will benefit from a maximum of only four bank holidays a year (depending on what day Christmas falls).

The Part-Time Workers (Prevention of Less Favorable Treatment) Regulations 2000 provide that part-time workers should have the same benefits as full-time workers on a pro rata basis. A full-time employee will get 8 days off for bank holidays. Therefore, a part-time employee who works say 3 days a week should get 5 days off in respect of bank holidays. As a maximum of only four bank holidays fall on the part-time employee's working days, how should the employer make up the additional day(s)$%: The DTI Guidance on part-time working suggests that it may be necessary to remove the disadvantage suffered by those staff who do not receive particular days off as a result of their particular working pattern, for example, by giving all workers a pro rata entitlement to days off in lieu according to the number of hours they work. In our example above, this would mean giving the employee at least one additional day off in lieu of bank holidays.

The difficulty with such a system is that it is complicated to administer and can have an adverse effect on part-time employees who do work on Mondays. If the part-time employee worked on Mondays, Wednesdays and Fridays, at least five bank holidays would fall on working days (all the Monday bank holidays and Good Friday). If Christmas Day and New Year's Day also fell on a Monday, seven bank holidays would fall on working days. Under the pro-rata system suggested by the DTI, the employee would only be entitled to five days of bank holidays. What should the employer do about the other two bank holidays for which they would have been paid$%: There are two options. Either the employee would be required to use some contractual holiday entitlement to cover those days or alternatively be given the option of coming to work on a day they did not normally work. Neither of these options would be favored by employers or part-time employees, as they are difficult to administer and would not fit in with part time working arrangements.

Many employers therefore simply give their part-time staff the benefit of bank holidays if they fall on one of their normal working days. This system clearly does not always give part-time staff the same benefits as full-time staff on a pro-rata basis. As such, it is unlawful discrimination, unless an employer can justify it. There is an argument that an employer could justify this system of restricting the benefit of time off for bank holidays to staff who actually work on those days on the basis that the time off relates to the days worked rather than the part-time status. However, this argument is untested.

This issue may be resolved in the not too distant future as the Government proposed in its 2005 election manifesto that during their third term they would extend the entitlement to paid annual leave to include bank holidays. The Government has included an enabling power in the Work and Families Bill. This is subject to further consultation and is not expected to come into force until 2007 at the earliest. What is worth noting however is that the DTI make clear in their Guidance that if bank holidays are treated as additional leave on top of the statutory four weeks, the amount of time allocated to part-time staff will be calculated on a pro-rata basis.

There is no easy solution to this issue. Employers need to consider their working arrangements carefully. If you would like further advice on this, please contact one of the employment team.