Holiday during sickness absence

If you have an employee on long-term sickness absence, they have the right to take their annual leave during that period. Legal expert Kirsty McIntyre explains the impact of a European Court of Justice (ECJ) decision on the matter.

THE PROBLEM

I run a small restaurant in Norwich. My sous chef was on long-term sickness absence for eight months. He has recently returned and wishes to take the holiday he accrued while he was absent. Does he have the right to take this leave?

THE LAW

The current legal position in the UK in respect of annual leave is simple - use it or lose it.

The Working Time Regulations entitle all employees to 28 days' paid holiday each year. The regulations do not allow employees to carry over these days to the next year unless there is a specific clause in their contract of employment allowing them to do so and, even then, only eight days may be carried over. However, several high-profile decisions made over the course of 2009 have affected this position.

In the case of Stringer and Others v HM Revenue & Customs (2009), the European Court of Justice (ECJ) decided that workers on sick leave continue to accrue their holiday entitlement for the entire duration of their sick leave. The UK courts then decided that in order to marry this decision with the current UK legal position - ie, that "leave… may only be taken in the leave year in respect of which it is due" - it was necessary to interpret the regulations as allowing workers on long-term sick leave to take (and be paid for) annual leave while on sick leave.

In late 2009 the ECJ considered the case of Pereda v Madrid Movilidad (2009) and what happens when a worker falls ill during a period of pre-arranged statutory holiday. The ECJ ruled that the worker had the option of designating an alternative period of leave as annual leave.

This case also made it clear that although workers can take annual leave while on sick leave, employers cannot force workers to do this, which means workers can carry forward the leave they have been unable to take.

EXPERT ADVICE

These recent decisions could have potentially weighty implications for employers, particularly if you have employees on long-term sickness absence. So how should employers approach this?

The current legal position in the UK is in accordance with the Working Time Regulations, so you could continue to operate the "use it or lose it" principle. However, you should be aware that this may be contrary to European Union law and recent ECJ case law, which tribunals are following in favour of the regulations.

In Shah v First West Yorkshire Limited, the tribunal found that holiday during sickness could be carried over to the next year, and in Rawlings v The Direct Garage Door Company Limited, the tribunal held that a worker who had been on sick leave for the last 15 months of his employment was entitled to statutory holiday pay in respect of that period. These decisions are not binding but they do give an indication of how other tribunals may deal with such matters.

Alternatively, you may consider giving notice to workers to take annual leave during a period of long-term sickness absence. But remember - you cannot force them to do this.

CHECK LIST

â- Employers may therefore wish to consider whether additional evidence of sickness should be required from employees in these circumstances and whether their system of sickness absence reporting applies to an employee who is on holiday.

â- Employees may also wish to ensure that their current measures of absence reporting continue to apply to those individuals who are on long-term sickness absence.

â- If necessary, speak to your professional adviser about both the Working Time Regulations and recent case law in order to understand your position fully.

BEWARE

More prudent employers might consider budgeting for the possibility that employees on long-term sick leave will be entitled to carry their leave forward over a number of years. This could result in a large payment in lieu of annual leave upon termination, particularly since employees may be able to claim for holiday pay as an unlawful deduction, which means they could claim beyond the current holiday year for the loss of several years' holiday pay.

CONTACT

Kirsty McIntyreis an employment lawyer at HR Insight