The European Court of Justice (the "ECJ") has held that, where a worker is sick during a period of pre-arranged annual leave, they should be given the opportunity to take that period of annual leave at a later date, even if this will fall in the worker's next annual leave year.
As an ECJ decision it does not have "direct effect" for the private sector, which means that their workers will not be able to rely on this ruling in challenging policies which state that workers who are sick during a period of annual leave "lose" that period of annual leave. It is now up to the government to decide whether to amend the Working Time Regulations (WTR) to give effect to this decision in UK law.
However for public sector employers their workers will be able to argue that the ECJ's judgment does have direct effect and that they should be entitled to benefit from it. Although many public sector employers already operate a system whereby annual leave can be recredited to workers where it coincides with a period of sickness. In such situations it is advisable for the employer to request evidence of illness (or at least consider amending employment policies to allow for medical evidence to be supplied before agreeing to reschedule holiday).
In the case of Pereda v Madrid Movilidad SA ("Pereda"), Mr Pereda worked for Madrid Movilidad removing wrongly parked cars from public highways, receiving in return the corresponding parking charges and fees. Mr Pereda suffered an accident at work approximately two weeks before the commencement of his allocated period of 4 weeks annual leave. As a result of the injury Mr Pereda was unable to work for 6 weeks. His sick leave overlapped with almost the entire period of his planned annual leave. He requested an additional period of annual leave but this was refused by his employers without giving reasons. Mr Pereda challenged this decision in the Spanish Labour Court who referred the question of whether the Working Time Directive allows a worker in Mr Pereda's circumstances to take the annual leave at a later date, including during the following leave year.
The ECJ ruled that Mr Pereda's period of sick leave should not have counted towards his annual leave period. The ECJ noted that annual leave and sick leave had different purposes. The purpose of annual leave is to enable a worker to rest and enjoy a period of relaxation and leisure. The purpose of sick leave is to allow the worker to recover from being ill.
The entitlement to 4 weeks' annual leave under the Working Time Directive is "a particularly important principle of community social law from which there can be no derogations". Although national laws can impose conditions on the exercise of that right, this is only when the worker has been given an opportunity to exercise that right.
This decision follows the ECJ's ruling in the case of Stringer (see Howes Percival Newsflash 22nd January 2009) which established that the right to annual leave is not lost where a worker has been on sick leave and that the Working Time Directive does not preclude a worker taking their annual leave during a period of sick leave.
Therefore the present position for employers dealing with employees who are on sick leave is:
- An employee who is on sick leave continues to accrue their statutory holiday entitlement under the Working Time Regulations. This means that when their employment ends they must be paid in lieu of any statutory holiday accrued during periods of sick leave.
- An employee is allowed to designate a period of their sick leave as 'holiday' under the Working Time Regulations and be paid for it.
- For employees who work in the public sector, where their sick leave coincides with a period of pre- arranged annual leave, the employee can choose whether to take their annual leave during their period of sick leave or defer it until they recover from their sickness and return to work - even if that means carrying over their annual leave to the following leave year.
As the UK's Working Time Regulations limit carry over of statutory holiday under the Regulations to 8 days per year, the UK government may have to amend the Regulations to give effect to this ECJ decision.