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XpertHR's head of content Jo Stubbs and group editor David Shepherd ask whether or not workers have the right to carry over statutory minimum annual leave where they have been unable to take leave due to sickness.
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The questions in
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Is there any legislation on the relationship between paid annual leave and sickness absence?
No, there is no legislation on the relationship between paid holiday and sickness absence. The Working Time Directive (2003/88/EC) requires member states to allow at least four weeks’ paid annual leave. This is implemented in the UK by the Working Time Regulations 1998 (SI 1998/1833). Regulation 13 provides for four weeks’ basic annual leave entitlement and the Government recently made provision for an additional 1.6 weeks’ entitlement under reg.13A, making a minimum entitlement of 28 days for someone working a standard five-day week.
Under reg.13(9), the basic four-week holiday entitlement cannot be carried over to the next holiday year. By agreement, the additional 1.6 weeks’ holiday can.
What did Stringer say on sickness and holiday?
Stringer and others v HM Revenue and Customs sub nom Commissioners of Inland Revenue v Ainsworth and others; Schultz-Hoff v Deutsche Rentenversicherung Bund [2009] IRLR 214 ECJ involved employees who were on long-term sickness absence and either wanted to take a period of paid annual leave during their otherwise unpaid sickness absence or claimed pay in lieu of their untaken holiday on being dismissed. The European Court of Justice (ECJ) ruled that a period of sickness absence cannot result in workers losing any part of their entitlement to minimum paid holiday. Workers on long-term sick leave accrue statutory annual leave and must be paid it at their normal rate of pay, even where the sickness lasts for the entire annual leave year. The ECJ said that, there is nothing to prevent member states having rules providing that the right to paid annual leave extinguishes at the end of the leave year, provided that workers have had the opportunity to take their paid annual leave. Therefore, where a worker has been denied the right to take holiday because of sickness, the worker must be allowed to carry over the entitlement on returning to work.
How did the UK courts interpret the ECJ decision?
Unfortunately, when the case returned to the House of Lords, there was no need for it to consider whether, in light of the ECJ judgment, the Working Time Regulations 1998 should be interpreted as allowing workers to take annual leave while they are off sick or whether annual leave must be postponed until after the period of sick leave. However, it seemed that the former would fit better with the Regulations, as there would be no need to allow carry-over of annual leave into the following leave year.
What did the subsequent ruling in the Spanish case of Pereda mean for sickness and holiday?
Mr Pereda’s case was different. His employer had allocated him a period of holiday but, when the time came to take the holiday, he was on sick leave because of an accident. He asked his employer to allocate him another period of leave to compensate for the missed leave, and when the employer refused he challenged this decision in the Spanish courts. They referred the case to the ECJ, which ruled that national laws and collective agreements must not prevent a worker who is on sick leave during a period of scheduled annual leave from taking the leave at a later time, even if this means taking it outside the leave year in which the leave was accrued (Pereda v Madrid Movilidad SA [2009] IRLR 959 ECJ).
So, although, according to the ECJ decisions, workers can take paid holiday during a period of sickness, if they prefer not to, they must be allowed to take the leave at a later date, even if this means carrying it over into another holiday year.
Where does this leave UK employers?
Public sector employees could argue that art.7 of the Working Time Directive is sufficiently precise to have direct effect, allowing them to rely on the ECJ's interpretation of the Directive. Private sector employees would ordinarily have to rely on the Working Time Regulations 1998.
However, matters have moved on a step with a recent domestic employment tribunal decision – Shah v First West Yorkshire Limited.
What were the facts in Shah?
Mr Shah’s leave year ended on 31 March. He had booked four weeks’ holiday from 22 February to 21 March 2009, but broke his ankle in January and was off sick until mid-April. He asked to retake the holiday that he had lost through sickness, but the employer refused the request and he brought a tribunal claim.
What did the tribunal rule?
The tribunal took into account the Employment Appeal Tribunal (EAT) decision in EBR Attridge Law LLP and another v Coleman (No.2) [2010] IRLR 10 EAT, which concerned associative disability, which, on the face of it, is not outlawed by the Disability Discrimination Act 1995. When the case was before it, the ECJ had, however, ruled that protection under the Equal Treatment Framework Directive (2000/78/EC), with which the Act is required to comply, is not limited to people who are themselves disabled. In that case, the EAT was willing to read several subsections into the Act so that it complied with the ECJ's interpretation of the Directive with regard to associative discrimination. It did this on the basis that this did not go against the overall purpose of the Act.
Taking this into account, the employment tribunal in Mr Shah’s case was satisfied that interpreting reg.13(9) of the Regulations (which prohibits carry-over of the minimum four weeks' paid leave entitlement) in accordance with Pereda was consistent with the underlying thrust of the Regulations. It therefore read into it that the basic four-week statutory leave entitlement can be taken only in the leave year that it falls due, except where the worker has been prevented by illness from taking holiday by illness and returns from sick leave covering that holiday with insufficient time to take the holiday in that leave year. In those circumstances the employee must be given the opportunity to take the holiday in the next leave year.
Is this decision binding on other tribunals?
No, but it gives an indication of how other tribunals could approach the issue of someone who has not been able to take annual leave because of sickness. In the meantime the Government has said (guidance on the BIS website) that it intends to consult on possible changes to the Working Time Regulations 1998 as a result of the ECJ decisions in Stringer and Pereda. That consultation is expected over the summer, although of course the current Government may not be in power then.
So are UK employers in a position of uncertainty?
Yes, it is not possible to give definitive guidance on how employers should deal with annual leave that coincides with sickness absence.
It would appear that the approach of least risk would mean permitting employees who are off sick at the time of previously scheduled holiday to take the holiday at a later time, even if this means allowing them to take it in the next holiday year. But lots of questions have not yet been addressed, including whether the same principle would apply to someone who falls sick while on holiday and what evidence of sickness can be requested.
"How to"
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Model policies
and documents
From the XpertHR model policies and documents
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Line manager briefings
The XpertHR line manager briefing on annual leave aims to help line managers to understand the laws on holiday entitlement and holiday pay and how they have been interpreted by courts and tribunals.
Case law
The cases referred to in this video are:
Latest tribunal and appeal cases
Keep up with the latest employment cases with the XpertHR in the tribunals and stop press sections. "In the tribunals" provides summaries of recent tribunal decisions, along with transcripts of the judgments, while "stop press" provides the latest decisions from the EAT, Court of Appeal, Supreme Court and ECJ, as well as information on cases on appeal.
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