Editorial from IDS Brief 846, February 2008

Sickness absence – without leave?

The question of whether workers on long-term sickness absence can accrue entitlement to, and even take, paid annual leave under the Working Time Regulations 1998 SI 1998/1833 has been troubling UK courts for several years. Back in April 2002, the EAT, in Kigass Aero Components Ltd v Brown and other cases (Brief 706), ruled that workers off sick could give their employers notice that they wish to take a period of annual leave, and receive holiday pay in respect of it, even though they continue to be sick during this period.

That was the state of the law until April 2005 when the Court of Appeal, in Commissioners of Inland Revenue v Ainsworth and ors (Brief 781), held that Kigass was wrongly decided. The Court held that allowing workers on long-term sick leave to declare part of that leave to be a notional holiday did not further the health and safety objective of the EC Working Time Directive (No.2003/88), which the Regulations implement, and instead landed the worker with a windfall. When the case reached the House of Lords, under the name Stringer and ors v HM Revenue and Customs, their Lordships made a reference to the ECJ for a preliminary ruling on the Directive’s application to this situation.

Leave accrues during sickness absence…

Advocate General Trstenjak has now given her Opinion in the case, concluding that the right to accrue minimum annual leave should not depend on the worker being fit and available for work. In her view, a worker on sick leave is entitled to designate a future period as paid annual leave. However, he or she may not take the annual leave (and therefore the payment for it) during a period in which he or she would otherwise be absent through illness. In addition, the Advocate General stated that where an employment relationship is terminated, the worker will be entitled to a payment in lieu of accrued, untaken holiday, whether or not the worker was on sick leave for part or all of the leave year in question.

At first glance, there seems little point in a worker’s being able to designate a period of annual leave while off sick if he or she cannot actually take it. However, in an Opinion given at the same time, in Schultz-Hoff v Deutsche Rentenversicherung Bund (Case C-350/06), Advocate General Trstenjak extended the logic of this reasoning to conclude that a worker must be able to take the annual leave so designated when he or she returns to work, even if that occurs in the following leave year.

… and can be carried over

The Advocate General thus concluded that there was a breach of the Directive when, under German law, a worker’s right to annual leave, which went untaken due to sickness absence, expired at the end of that leave year. She thought that providing for the expiry of the minimum leave entitlement was contrary to the Directive’s health and safety purpose, and so leave untaken through illness in a leave year should still be available on the worker’s return to work. In so concluding, the Advocate General had regard to the ECJ’s judgment in Federatie Nederlandse Vakbeweging v Staat der Nederlanden (Brief 804), where it held that leave accrued in one year but not taken until the next still contributed to the health and safety aim of the Directive.

Possible implications for UK law

These Opinions are, of course, not binding on the full court of the ECJ when it comes to give judgment – probably in around six months’ time. It is often said that an Advocate General’s Opinion is a reasonably firm indication of which way the ECJ will eventually jump. However, in recent years the ECJ has seemed prepared to depart from the Advocate General’s opinion on a fairly regular basis. Given this, it is extremely difficult to predict with any degree of certainty what the Court’s final judgment will be.

That said, the Opinion in Schultz-Hoff will, if followed, raise an interesting question concerning the compatibility of the Working Time Regulations with the Directive. The Advocate General made clear that national law must not restrict the effectiveness of the Directive, including the right, as she saw it, for workers absent on long-term sick leave effectively to ‘carry over’ their holiday entitlement into the next year. There is no provision in the Regulations for such carry-over. In fact, Reg 13(9) provides that statutory minimum leave ‘may only be taken in the leave year in respect of which it is due’. While Schultz-Hoff is a German case, and so the eventual ruling will not of itself require changes to UK law, a concurring judgment of the ECJ would place the Government under strong pressure to take remedial action in respect of the Working Time Regulations, or face a legal challenge.

Other implications would be that workers dismissed after a lengthy period of sick leave would generally be entitled to a payment in lieu of holiday, as they will have accrued leave but will not have been able to take it. Furthermore, workers who return to work after a period of sick leave of more than a year should be entitled to take their ‘carried- over’ four weeks’ leave on top of their entitlement for the current year. However, without provision for carry-over in the Regulations, it is hard to see how these rights could be enforced, at least for private sector workers. Public sector workers, on the other hand, might be able to bring claims relying on the Directive. We await the ECJ’s final ruling with interest.