Holiday and sickness absence

We are often asked what the legal position is in relation to holiday for employees who are off on long-term sick leave – in particular where their absence has spanned over an institution’s holiday year.

May 8, 2008

This issue has inspired much case law and ongoing legal debate. The position is far from clear at present, but the most recent position is set out by the Advocate General in a written opinion handed down in the case of Stringer and others v HMRC in January of this year.

The Advocate General had been assigned to two cases that were referred to the European Court of Justice (ECJ) and has expressed the view that although paid holiday leave as guaranteed by the Working Time Directive cannot be taken during sickness absence, it does continue to accrue during such absence. On termination, a worker is entitled to a payment in lieu of untaken holiday even if he or she has been off sick since the beginning of the leave year. This means that, for the purpose of holiday accrual, sickness absence would be treated the same as if the worker had been at work, at least in the case of the leave guaranteed by the Working Time Directive (which is currently 4.8 weeks or 24 days).

By way of background, the case previously went under the name of Commissioners of Inland Revenue v Ainsworth, under which guise it came before the Court of Appeal in 2005. The Court of Appeal had ruled that a worker could not take paid holiday leave under the Working Time Regulations 1998 during a period of sick leave. To that extent, the court’s judgment is in line with the Advocate General’s opinion. However, the Court of Appeal went on to decide that if a worker’s employment ends without their having worked at all during the holiday year, they would not qualify for a payment in lieu of untaken leave, a conclusion with which the Advocate General disagrees.

The Court of Appeal’s decision, which raised as many questions as it answered, was then appealed to the House of Lords, which referred the case to the ECJ. There, the case has also been linked to a German case (Schultz-Hoff), which, similarly, centres on whether workers should receive minimum paid annual leave during a long period of incapacity.

As stated in Stringer, the Advocate General’s opinion is that holiday cannot be taken during sickness absence but it does continue to accrue in the same way as if the worker had been at work. So what happens to a worker who is unable to take their leave entitlement before the end of the leave year due to sickness? In her opinion in the Schultz-Hoff case, the Advocate General said that if a worker cannot take their leave entitlement before the end of the leave year due to sickness, they should be allowed to carry leave over to the following year. How this would work in practice remains unclear, although the Advocate General suggests that it would be for individual member states to fix the circumstances in which carry-over would be permitted and workers could be given incentives to encourage them to take leave within a reasonable period.

The Advocate General’s role is that of independent adviser to the Court and her opinion carries considerable weight, but there are plenty of recent examples of the ECJ disagreeing with its Advocate General’s views. Her opinion is therefore persuasive at best. The ECJ will give its final rulings in all these cases later this year, and we await the decisions with interest. Watch this space…

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