UK: Advocate General: Employees On Long-Term Sick Leave Should Accrue Holiday

Last Updated: 28 February 2008
Article by Joanna Blackburn and James Libson

The Advocate General to the European Court of Justice ("ECJ") has recently given her opinion in the case of Stringer v HM Revenue & Customs. This case concerns whether workers are entitled to paid annual leave during long-term sick leave. In this month's briefing, we take a look at that opinion and the possible implications for employers. We also report on another opinion by the Advocate General dealing with disability discrimination by association, as well as a recent Court of Appeal decision on agency workers.

Leave entitlement during sickness absence

The claimants in Stringer were a group of employees who had been absent from work on long-term sick leave and had exhausted their entitlement to contractual and statutory sick pay. They argued that they were nevertheless entitled to paid leave under the Working Time Regulations. Both the Employment Tribunal and the Employment Appeal Tribunal agreed but when the Revenue appealed to the Court of Appeal, those decisions were overturned. The case finally reached the House of Lords and their Lordships referred it to the ECJ for a preliminary ruling.

The Advocate General has now given her opinion on the questions referred by the House of Lords. As you may be aware, the Advocate General's role is to propose to the ECJ a legal solution before the ECJ hears the case. The Advocate General's opinion is not binding on the ECJ but it is often followed.

In summary, the Advocate General's opinion (coupled with another opinion in a similar case given at the same time) is that:

  • Annual leave continues to accrue during a period of sick leave
  • However, the leave cannot be taken during sick leave (so a worker may not designate a period during their sick leave as holiday and receive payment during that period)
  • The accrued holiday can be taken on a return to work, even if the return is in the following leave year
  • If the employment is terminated, the employer is obliged to make a payment in lieu of the accrued holiday.

Therefore, if a worker remains on sick leave at the end of the leave year, the accrued holiday will be carried over. It remains to be seen how this will be reconciled with the Working Time Regulations, which currently do not allow for annual leave to be carried forward.

The ECJ decision is expected in about six months time. If the ECJ follows the Advocate General's opinion, employers may have to provide significant holiday for those employees returning from long-term sick leave, or a payment in lieu if the employment is terminated.

It is worth noting that the issue here concerns statutory holiday only and so employers can still provide in employment contracts that contractual leave in excess of the minimum does not accrue during sick leave. Nevertheless, the increased liability may influence employers to try to terminate the employment of employees on long-term sick leave at an earlier stage than would otherwise be the case. However, it is important to remember that careful consideration should be given and the proper procedures followed before any dismissal, to avoid claims for unfair dismissal and/or disability discrimination and claims under PHI schemes.

DDA should protect those associated with a disabled person

In the case of Coleman v Attridge Law, Ms Coleman was an employee who cared for her disabled son. She claimed that, although not disabled herself, she had been discriminated against on the grounds of her son's disability. However, on a literal reading, the Disability Discrimination Act ("DDA") only protects against discrimination on the grounds of a person's own disability.

Ms Coleman argued that the DDA should be interpreted in accordance with the EU Directive with which the DDA is required to comply. The case was therefore referred to the ECJ to rule on whether the EU Directive covers disability discrimination by association. The case has not yet been heard but another Advocate General has given his opinion, which is likely to be followed by the ECJ.

The Advocate General has said that disability discrimination by association is unlawful under the Directive. Thus an employee is protected against discrimination if the disability of another is used to treat that employee less favourably.

Assuming that the ECJ agrees when it decides the case later this year, the UK employment tribunal will then have to determine whether the DDA can be interpreted to include discrimination by association. If so, employers will need to be aware that workers, particularly carers, will have a new cause of action if they are treated less favourably on the grounds that they care for someone who is disabled. Arguably, the discrimination legislation dealing with religion and sexual orientation already covers discrimination by association and case law has established that a person can be racially discriminated against on the basis of someone else's race. However, the interpretation of the Directive means that all forms of discrimination will be extended to include discrimination on the basis of characteristics not only of the employee, but of a third party connected with the employee.

Agency worker not an employee of client

Finally, we turn to the case of James v London Borough of Greenwich. In this recent case, the Court of Appeal has confirmed that an employment contract will only be implied between an agency worker and an end-user (client) where it is necessary to do so or where the agency arrangement is a sham. Where there are already genuine arrangements in place explaining the relationship between the parties (e.g. a contract between the agency worker and the agency, and a separate contract between the agency and the client, as is normally the case), it will not be necessary to imply an employment contract.

The case comes as a relief to any business using agency workers. However, for agency workers, it means that, unless they can show that they are employees of the agency (which for many agency workers would be difficult), they will only benefit from employment protection in very rare circumstances.

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This article is only intended as a general statement and no action should be taken in reliance on it without specific legal advice.

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