Until fairly recently, case law had established that, in effect, workers on long-term sickness absence could still claim statutory annual leave (in terms of the Working Time Regulations ("WTRs")) in a year they had not worked. This contentious situation was, however, altered by the Court of Appeal in Inland Revenue Commissioners v Ainsworth in 2005. This case concerned employees absent from work on long-term sick leave, who had exhausted their entitlement to contractual and statutory sick pay and who brought tribunal claims seeking to establish that their entitlement to paid holiday under the WTRs endured even when they were not attending work.
On appeal, the Court of Appeal held that workers on long-term sick leave have no legal right to take paid annual leave while absent from work, since this did not serve any health and safety benefit and instead landed the worker with a windfall.
The decision meant that employers could refuse a request from a worker on sick leave to convert a period of sick leave into paid holiday leave (in the absence of contractual right to the contrary). Further, workers on sick leave throughout an entire holiday year had no right to holiday leave or holiday pay in that year.
However, the claimants appealed to the House of Lords, who remitted the issue to the European Court of Justice ("ECJ") in December 2006 (under the new name of HMRC v Stringer). Prior to an ECJ ruling, the Advocate-General provides an opinion which is generally, although not always, followed by the full court and she has recently given her opinion in this case to the effect that:
- Entitlement to paid holiday does accrue whilst a worker is absent on sick leave, however, workers may not take their holiday while they are on sick leave; and
- On termination of the contract, a worker is entitled to a payment in lieu of accrued but untaken holiday, whether or not the worker was on sick leave for part or all of the leave year.
It remains to be seen whether the ECJ will follow the Advocate-General's opinion. In the meantime, employers will need to consider what they wish to do going forward. The cautious employer may choose to ensure that a worker continues to accrue statutory holiday during any sickness absence and allow the worker to take the accrued leave on their return. In respect of an employee whose employment is terminated, such an employer would seek to ensure that a payment in lieu of accrued but untaken holiday entitlement is paid on termination. Alternatively, an employer choosing a more bullish approach may wish to wait for the ECJ's formal ruling which is expected in the next few months, before changing its approach.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
