On 20 January 2009 the European Court of Justice (ECJ) opened the door to employees being entitled to take extra time off for holiday and/or being paid for holiday when they are on long-term sick leave.
Issues
In the jointly heard cases of Stringer & ors v Her Majesty’s Revenue and Customs and Gerhard Schultz-Hoff v Deutsche Rentenversicherung Bund [2009] the ECJ was asked to consider:
- whether a worker on indefinite sick leave is entitled to take and be paid for annual leave; and
- whether, on termination of employment, a worker who has been on sick leave accrues, and is therefore entitled to be paid for, annual leave in lieu.
ECJ Ruling
In response to the above questions, the ECJ held that:
- A worker who is on long-term sick leave is entitled to their minimum statutory entitlement to annual leave that accrues during their sickness absence, in the same way as an employee who has not been on sick leave. The worker will be able to take the holiday once they return to work.
- The right to paid annual leave is not extinguished if the worker is dismissed in a year during which they were on sick leave for the whole or part of that year and the worker was still on sick leave when the employment was terminated. The worker will be entitled to be paid in lieu of any untaken leave accumulated during the sickness absence. The ‘allowance in lieu’ should be equivalent to normal pay.
Conclusion
What this means is that workers do not lose their right to statutory annual leave that they have been unable to exercise because of their sickness. The worker must be compensated for paid annual leave that was not taken due to long-term sickness absence, either by paid holiday if they return to work, or in cash if they are dismissed while on long-term sickness absence. The cases will now be referred back to the national courts of England and Germany respectively, which will, in due course, hand down their judgments in accordance with this ruling. Consequences This ruling comes as an unwelcome blow to employers amid the current economic crisis. Employers will now have to take holiday entitlement into account when considering dismissing workers who are on sick leave, in addition to any redundancy or termination payment.
From a practical point of view, employers would be well advised to carry out comprehensive reviews of their sickness and holiday policies to ensure that they are in line with this ruling.
