The Issue

In Pereda v Madrid Movilidad SA the European Court of Justice ("ECJ") has decided that a worker who is ill during pre-arranged annual leave should be allowed to take that period of annual leave at a later date, even if that means carrying holiday over into a subsequent holiday year.

After the recent decision in Stringer v HMRC (see our July E-alert) it was thought employers could require workers to take their holiday while on sick leave and that those who did not, would lose it. Pereda may mean businesses cannot do this and a sick worker who does not agree to take annual leave during their sickness absence must be given the opportunity to take that annual leave during a different period.

The Consequences

• Previously, sickness during a worker's annual leave meant that holiday was used up. Work rosters may now be disrupted as workers have the right to claim back and take later their annual leave used while unwell.
• Leave costs will rise where a business allows longer paid contractual sick leave.
• Monitoring of self-certified ill health during agreed holiday where workers are either abroad or unwell for less than 7 consecutive days and so outside the medical certificate regime will be challenging.
• If a worker is prevented by ill health from taking annual leave during the current holiday year, he will be able to carry it forward to the next. However, currently the Working Time Regulations do not permit the carry over of the four weeks statutory holiday in the Directive and may need alteration.
• Only workers in the public sector can rely on Pereda directly. The Working Time Regulations still apply to the private sector where workers are unable to enforce EU rights directly in a tribunal.
• It is unclear whether this decision applies to more than the four weeks holiday provided by the European Directive.

The Solution

Businesses can address the Pereda issues by:

• Introducing back to work interviews and other measures to monitor workers' claims to have been ill whilst on annual leave.
• Tightening up sick leave notification and certification requirements to discourage workers from taking sick leave unless it is really necessary, for example inserting a requirement to notify the employer before 9am on every day of sick leave and making the payment of sick pay contingent on this.
• Inserting a contractual requirement for workers to produce medical evidence of sickness of less than eight days' absence as a condition of paying for sick leave and triggering the ability to re-book holiday.
• Radically, businesses could remove the right to contractual sick pay.
• Clarifying in employment policies that there can be no carry forward of any annual leave in excess of statutory holiday.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.