In the case of Pereda v Madrid Movilidad SA, the European Court of Justice ("ECJ") has ruled that where a worker is sick during his annual leave, annual leave must be granted for a different period and, if necessary, outside the relevant holiday year.
This case comes hot on the heels of HM Revenue and Customs v Stringer where the ECJ established that annual leave continues to accrue during sickness absence and it is for member states to determine whether or not a worker is permitted to take paid holiday while off sick. If it does not, however, a worker must be allowed to take it at a later date. It also ruled that a worker is entitled to payment in lieu of untaken holiday on termination of employment. The case returned to the House of Lords, which determined that a claim for unpaid holiday can be pursued as an unauthorised deduction from wages claim under the Employment Rights Act 1996, as well as under the Working Time Regulations (WTRs).
This means that a worker can now take advantage of the more generous time limits which apply to unlawful deduction claims. A claim under the WTRs must be brought within three months of each failure to pay the holiday pay or termination payment. By contrast, a claim for unlawful deduction from wages can be brought within three months of the last in a series of deductions, so allowing a claim to go back more than three months if the underpayments form part of a series.
Public sector workers will be able to rely on this decision immediately owing to the doctrine of "direct effect". Private sector employees are likely to have more difficulty and will have the option to either wait and see if the WTRs which are inconsistent with these decisions are amended, or ask an Employment Tribunal to interpret the Regulations in a way which is consistent. Either way, there are challenges for employers on how to handle annual leave and sickness going forward. Further case law is eagerly awaited, to clarify a number of grey areas which remain. We recommend that you review and update your policies to make your organisation's position clear.
We will be running Training Workshops on this topic on 1 December 2009 in Edinburgh and 3 December 2009 in Glasgow at a cost of £99+VAT per delegate. If you are interested in receiving further details in due course please e-mail marketing@macroberts.com
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.
