The vexed issue of holiday and holiday pay entitlement and how this interacts with sick leave has kept the courts busy for some time. We consider the recent decision of the European Court of Justice (ECJ) in the case of Sobczyszyn v Szkola Podstawowa w Rzeplinie (C-178/15) on the question of whether a worker who had been unable to take her annual leave due to sickness could carry it over to the next holiday year.

Facts

This case concerns a teacher at a school in Poland who claimed that she had been denied the holiday to which she was legally entitled. It is relevant to UK employers because the case addresses the interpretation of the Working Time Directive (the Directive), on which the Working Time Regulations (Regulations) are based.

Ms Sobczyszyn was on sick leave between 28 March and 18 November 2011. In 2012 she claimed that she was entitled to annual leave that she had accrued in 2011 but had been unable to take due to sick leave. The school refused her request, claiming that her entitlement to annual leave had been “used up” during a period of sick leave in July 2011. 

Ms Sobczyszyn brought a claim in the Polish courts, who referred the matter to the ECJ to consider whether the Directive should be interpreted as prohibiting a national law that would prevent an employee on sick leave during a time of scheduled holiday from taking that annual leave after the period of sick leave had ended.

ECJ decision

The ECJ held that such a national law would be incompatible with the Directive, so long as the national court was satisfied that the annual leave and sick leave had different purposes. If that was the case, Ms Sobczyszyn was entitled to her holiday accrued during her period of sick leave.

In reaching this conclusion the ECJ made a number of observations:

  • The right to four weeks’ paid annual leave under the Directive is a particularly important principle of EU law and not one that can be interpreted restrictively
  • The Directive does not prevent national legislation from laying down conditions for the exercise of the right to paid annual leave under the Directive, including the loss of that right at the end of a leave year, provided that the worker whose right to paid annual leave is lost had actually had the opportunity to exercise that right
  • Previous ECJ case law has indicated that the purpose of paid annual leave is to enable a worker to rest and enjoy a period of relaxation and leisure, and has suggested that this is different from the purpose of sick leave, which is to enable a worker to recover from an illness
  • Where the purpose of the two types of leave is different, a worker who is on sick leave during a period of previously scheduled annual leave should be able to take the annual leave during a period that does not coincide with the period of sick leave.

Comment

This decision is consistent with earlier ECJ decisions and therefore largely confirms the existing case law in this area rather than changing it significantly. 

Although the ECJ limited its decision to cases where holidays had already been scheduled, it is quite likely that the same reasoning would apply equally to the carry-over of holiday that had not been scheduled. Similarly, although the ECJ indicated that it was a matter for the national courts to decide in any given case whether the purpose of sick leave is different from that of paid annual leave, it is fairly clear both from this decision and previous case law that the two types of leave are likely to be viewed as having different purposes.

This leaves us in a position where the Regulations are inconsistent with the Directive on which they are based. This is because Regulation 13(9) of the Regulations specifically states that leave under that Regulation may only be taken in the leave year in which it is due. This is directly contrary to ECJ case law on the Directive, which allows for annual leave under the Directive to be carried over to the next holiday year when it cannot be taken in the holiday year in which it has accrued due to sickness. 

The UK courts have previously considered this conflict. The Court of Appeal in the case of NHS Leeds v Larner [2012] EWCA Civ 1034 found that wording should be read in to the Regulations (as far as holiday due under the Directive is concerned) to allow leave to be taken after the end of the leave year when a worker was unable or unwilling to take leave because he was on sick leave and as a consequence did not exercise his right to annual leave. The Employment Appeal Tribunal has also (in the case of Plumb v Duncan Print Group Ltd UKEAT/2015/0071) suggested that there should be a cut off so that such leave can only be taken within 18 months after the end of the leave year in which it was due. There is no reference to such a cut off period in the Sobczyszyn case (it would not have been relevant on the facts of the case) and it remains to be seen whether this principle holds good in future case law.

The fact that the approach taken by the UK courts in this area has been driven by the Directive leads to a couple of further observations:

  1. It appears likely that the Directive only requires the carry-over of holiday that cannot be taken during a period of sick leave in the case of the four weeks’ paid annual leave required by the Directive, and not in the case of the additional 1.6 weeks’ holiday required by the Regulations, or any additional enhanced contractual holiday entitlement. This is however subject to any express or implied terms of employees’ contracts of employment regarding carry over of holidays – depending on the terms of their contract, an individual may potentially have a contractual right to carry over this additional holiday entitlement, even if they do not have a statutory right to do so. 
  2. Brexit may ultimately have a significant impact on workers’ rights in this area. For the time being the Regulations will be interpreted by the courts in such a way as to comply with the Directive. However, following our departure from the EU this may no longer be the case, as the UK courts will probably not be bound by future ECJ decisions and it is also possible that the Regulations may be repealed or amended by Parliament. However, in these uncertain times it is impossible to predict what the implications of Brexit will be in this area, and this will be something to keep a close eye on as events unfold.