Absence from Work: Off Sick or On Holiday?

The Working Time Directive (implemented in the UK by the Working Time Regulations 1998) places an obligation on all employers, in all Member States of the EU, to allow all employees to take at least four weeks off as holidays per year. The period of paid holiday, under the WTR is an entitlement to paid time off work and cannot be paid without the leave being taken. The only circumstance in which an employee may receive a direct payment instead of taking holiday as leave is if the employee has accrued but untaken holidays at the date of termination of his employment. 

Illness during (or overlapping with) paid holiday under the WTR

If an employee falls ill whilst on holiday, does that render the holiday invalid as a necessary period of rest and recuperation as the holidays’ aim of recreation and relaxation will not have been achieved?  The European Court of Justice has recently favoured the employee’s right to a ‘real’ holiday in the following instances:

  •  In a case where the employee had fallen ill before the start of his paid holiday, but had already booked his holidays, the ECJ ruled in June that the employee was entitled to a rescheduling of the holiday with no deduction to his overall permitted paid holiday time, describing the factor of timing as ‘arbitrary’ (ANGED vs. FASGA, 06/21/2012, C-78/11).
  • In a case where an employee had been taken ill (because of an accident) during his period of paid holiday, the timing of the illness relative to the start of the holiday period was considered irrelevant by the ECJ, and the employee was permitted to reschedule with no cost to his paid holiday time (Pereda vs. Madrid Movilidad, 11/04/2009, C-277/08).

Beyond the WTR four-week mark

Where the employee’s contractual entitlement to paid holidays exceeds the four week minimum entitlement under the WTR, the employer is given discretion to make a payment in lieu of holiday or to decide that holidays are lost if not taken by reason of sickness. In Neidel vs Stadt Frankfurt am Main, 05/18/2012, C-337/10 the ECJ held that, beyond the four-week term, it was the decision of the employer whether to provide payment for the surplus holiday if the employee is too sick to take it.

This decision is slightly at odds with another recent decision of the ECJ that where provisions of pre-existing national law provide that all private employers are required to cover the entirety of the paid holiday rather than the four-week minimum, if the employee’s sick leave extend through all of the leave, national law should prevail over the Directive (Dominguez vs Centre Informatique Du Centre Ouest Atlantique, 01/24/2012, IRLR 321). Therefore, in essence, the Member States of the EU are free to apply their own laws regarding private employers’ payment obligations, where these are more favourable to employees than the provisions of the Directive. This is irrelevant to the UK as the provisions for paid holidays before the WTR where less favourable than the provisions in the Directive.

The carry-over period

As we have seen above, in the vast majority of cases, employees taken ill either during or overlapping with a period of paid holiday will be entitled to a rescheduling of their holiday with no loss to their total time of paid holiday. A further issue arises, when the leave is rescheduled, as to the length of the period during which the employee can take this extra leave. In a case where the employee claimed accrued payment for 86 days holidays contained within a three-year period of sick leave (at the end of which he retired, terminating the employment) the claim was refused on the grounds that it had not been made within the 9-month carry-over period specified by existing German legislation after the relevant leave year (Neidel vs Stadt Frankfurt am Main, 05/03/2012, C-337/10). The ECJ ruled that this German proposal of 9 months was incompatible with the Directive, due to its being shorter than the employee’s reference period of sick leave. The UK Government has recognised that the Working Time Regulations prohibition on carry-over periods, limiting these to within the same year as the original time of the scheduled leave, was equally incompatible with the Directive, suggested that, for each one-year reference period, all paid vacation within that period should be afforded an equivalent twelve-month period in which to be taken. This proposal however was also deemed incompatible with the Directive, on the grounds that the carry-over period must be substantially longer than the annual reference period in order for the employees’ rest periods to be staggered and properly planned in advance.

The British Government’s suggestion in its ‘Consultations on Modern Workplaces’ document of transferring the ‘cut-off’ point for carry-over periods from the same year to the next year is an attempt to address the prohibition of short cut off periods. There remains some ambiguity as to the appropriate length of the carry over period but a period somewhere between the 15 months suggested by the ECJ and the 18 months under the International Labour Organisation would seem a safe enough assumption.

If you need advice as to your employees’ leave or sick pay entitlements, please contact the Employment Team.

The material contained in this article is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

© , September 2012