News

Advocate General's opinion (pending a final decision of the ECJ) is that workers:

  • on sick leave do accrue statutory holiday entitlement;
  • may not take this holiday (and therefore the payment for it) whilst off sick;
  • can take the holiday on return to work, even if this is during the next leave year; and
  • are entitled to be paid in lieu on termination for statutory holiday entitlement accrued during sick leave (to be calculated at full salary – not SSP/contractual sick pay rates).

(Advocate General opinions in Stringer and ors v HM Revenue and Customs (UK) and Schultz-Hoff v Deutsche Rentenversicherung Bund (Germany)).

These opinions conflict with the Court of Appeal's decision in Her Majesty's Revenue and Customs v Stringer and others [2005] (formerly Commissioners of Inland Revenue v Ainsworth and others).

Implications

  • Only the ECJ's decision will be binding and the ECJ does not always agree with the Advocate General's opinion. Therefore it would be prudent to await the final decision of the ECJ before deciding upon whether you need to change your approach on this issue;
  • Any Tribunal claims brought on this point are likely to be stayed until the ECJ gives its decision;
  • Please note that the decision only relates to statutory holiday entitlement and should not affect the position in relation to contractual holiday entitlement (in so far as it exceeds the statutory minimum).

Details

1. Stringer and ors v HM Revenue and Customs:

This case involves two groups of employees who brought claims for holiday pay against their employer HM Revenue and Customs. The first group of employees claimed that whilst they were on sick leave they should be entitled to take annual leave (and therefore get paid for this period at 'normal' salary rates). The second group of employees, all of whom had been dismissed during a period of sick leave, claimed that they were entitled on termination to a payment in lieu of untaken annual leave accrued during their time off sick.

The Employment Tribunal and EAT, initially upheld the employees' claims. HM Revenue and Customs appealed to the Court of Appeal which allowed the appeal. The employees appealed the decision to the House of Lords. The House of Lords in turn, referred the matter to the ECJ for a preliminary ruling.

Although the ECJ is yet to give its final decision, the Advocate General's opinion is that:

  • a worker's right to take minimum annual leave should not be dependent on the worker being fit and healthy. Therefore, holiday entitlement can accrue even when the worker is absent on sick leave;
  • it follows that if a worker is on sick leave, they should be entitled to designate a future period as paid annual leave. However, the worker may not take the annual leave (and therefore the payment for it) whilst off sick;
  • the worker would be entitled to take a payment in lieu of leave accrued but untaken at the point of termination of employment (calculated based on the workers normal pay).

Therefore the employee must first return to work, before taking this period of annual leave. However, this opinion does not answer what happens if an employee is absent for a whole leave year. This question, however, seems to be answered in the following opinion (by the same Advocate General).

2. Schultz-Hoff v Deutsche Rentenversicherung Bund

In this case the Advocate General's opinion was that:

  • a worker must be able to take the annual leave when they return to work, even if this is in the following leave year.

Therefore, in theory, if a worker is absent on sick leave for a whole leave year, they may in the future be entitled to return to work the following leave year and have accrued a substantial amount of holiday entitlement!