A decision on annual leave.

On Tuesday 20th January 2009, The Advocate General of the European Court of Justice handed down her opinion in Stringer v HM Revenue and Customs, the case formerly called Ainsworth and others v Commissioners of Inland Revenue [2005]. The matter was referred by the House of Lords to ask whether Article 7 of the EC Working Time Directive means that workers on long-term sick leave who have exhausted their entitlement to sick pay must still receive minimum statutory annual paid leave. The ruling was requested by the House of Lords to clear up confusion surrounding what rights workers have when they are on long-term sick leave.

The answer, and it cannot be appealed any further, was that a worker has a right to paid annual leave that accrues while off sick, although they cannot take that paid annual leave during their sick leave.

The European Court of Justice declared: "A worker does not lose his right to paid annual leave which he has been unable to exercise because of sickness. He must be compensated for his annual leave not taken.”

"The entitlement to annual leave of a worker on sick leave duly granted cannot be made subject to the obligation actually to have worked in the course of the leave year laid down by a member state."

Incidentally this only applies to statutory annual leave, i.e. what is now 24 days and will be 28 days in April 2009. Unless an employer agrees otherwise, they could lose any leave over and above the statutory minimum.

Employees should still accrue paid days off even if they are unable to work, the judgement said, because their rights and job benefits cannot be dependent on how well they are.
They must also be allowed to take time off that they built up while ill the previous year, and receive a payment in lieu of days off if they leave a job having been unable to take their full complement of paid leave or, presumably where the employer agrees, carry the leave over.

It also means that an employee who quits or loses their job while on sick leave is entitled to a lump sum payment in lieu of holidays accrued but not taken while they were sick, on top of any redundancy or termination payment.

One leading lawyer said: "The decision will have serious financial and practical ramifications for employers across the UK and Europe. In these difficult times, further constraints could prove too much for some businesses struggling to keep up with existing requirements.”

The decision will need to be ratified by the House of Lords but they have little option to change it.

All employers will need to review their policies and procedures relating to annual leave.