HR Alert: Rule change on holiday sickness

A RECENT ruling by the European Court of Justice now means that employees who fall sick during a period of annual leave are entitled to take that leave at a later date.

In the case of ANGED v FASGA, the ECJ confirmed that annual leave and sickness have different purposes, one is for rest and relaxation and the other is to allow recovery from illness.

The issue of holidays and illness has suddenly become a complex area and further guidance from the government to clarify the situation is expected shortly.

The legislation covering annual leave comes under the Working Time Regulations 1998 (WTR), which in turn is derived from a European piece of legislation, the Working Time Directive (WTD).

Under UK law (i.e. the WTR) employees are entitled to a statutory minimum of 5.6 weeks’ annual leave which, for a full-time employee working five days a week, equates to 28 days. Under the European WTD, however, employees are only entitled to four weeks’ annual leave, or 20 days.

This point was highlighted in the ANGED case where, as the ruling was not made under UK law, the right to ask for holidays to be reinstated only applies to the four-week holiday leave provided under the European WTD.

The ANGED ruling is the latest in a number of developments regarding employee rights surrounding holiday and sick leave. Following recent employment cases, a number of issues in this area have been clarified but some still remain unclear. The first important point is whether an employee who goes off sick is still entitled to accrue annual leave?

This has always been the case for employees on maternity leave and, following the case of Stringer & Others v HM Revenue & Customs, it was decided that all workers continue to accrue leave while they are off sick. This has been standard practice for a while now.

The next question is if an employee is off sick and accruing annual leave, should this be at the rate of 5.6 weeks under the WTR or the four weeks under the WTD? This was considered in the case of Neidel v Stadt Frankfurt Am Main and it was ruled that the annual leave only accrues for the four-week period under the WTD. The government is proposing to amend the WTR to reflect this and to clarify that any employee on long-term sick is entitled to accrue up to four weeks’ annual leave only.

Following on from this, the next question is whether an employee can take annual leave while on sick leave? There have been conflicting rulings on this matter, but the most recent one decided that employees on sick leave do have the right to take and be paid for any accrued annual leave.

But can an employee on long-term sick take this leave at a later date? The short answer is “yes”. If an employee is on long-term sick, refusing to allow them to take holidays could breach the WTR as the employee would be prevented from taking their statutory leave in the holiday year.

Further clarification arrived in a UK Court of Appeal ruling in summer 2012 which stated that employees on long-term sick are automatically entitled to carry forward their annual leave into the next holiday year – even if they do not request to do so. They are also entitled to be paid for this outstanding leave if their employment is terminated.

Unfortunately, no UK case has dealt with the question of how long this carry-over period should be but two European cases have. One set a time limit of nine months while another decided on 15 months.

This is another area that the UK government do need to clarify. And the final issue to consider regards the evidence an employee should be required to produce to prove they have been ill during the holiday period. It is reasonable for practices to ask for evidence of sickness in accordance with their usual sick pay policy.

Holiday and sickness is now a challenging and changing area of employment law and practices are advised to seek professional advice in any areas they are unsure of.