The People Bulletin

The European Court of Justice (ECJ) has decided that if a worker is sick during a period of pre-planned annual leave, that worker must be allowed to take that holiday another time. If it is not possible to retake the leave during the current holiday year, the lost leave can be carried forward to the next one. This follows on from its recent decision in HMRC v Stringer that statutory annual leave both accrues and can be taken during sickness absence. (See ‘Uncertainty remains over holiday pay during sickness’ in The People Bulletin, 18 June 2009.

Mr Pereda worked as a specialist driver for Madrid Movilidad SA, a firm specialising in the removal of wrongly parked cars from the public highway in Spain. He had been allocated a period of leave from 16 July to 14 August 2007 in line with his employer’s staff leave schedule for that year. A few weeks before he was due to go on holiday, he had an accident at work and was unfit for work until 13 August 2007. This meant he was on sick leave right up to two days before the end of his scheduled holiday. In September of that year, he asked his employer if he could take his annual leave from 15 November to 15 December in the same year on grounds that he had been on sick leave for his original holiday. Madrid Movilidad declined the request without providing any reasons and Mr Pereda brought a claim in the local Spanish court. The ECJ was asked to provide guidance on the correct interpretation of Article 7 of the European Directive 2003/88 on working time and how this relates to annual leave.

The ECJ held that Mr Pereda should be allowed to reschedule his annual leave if he wanted to. This judgment clarifies one important aspect of the ruling in Stringer, which had left unresolved the position of workers who do not want to take annual leave during sick leave. Stringer had left open the possibility that workers could be required by their employers to take their annual leave whilst off sick or otherwise risk losing their accrued entitlement at the end of the holiday year.

In the light of this new ECJ decision, employers cannot require workers to take paid annual leave during a period of sickness absence. The ECJ clarified that sick leave is to allow workers to recover from illness, whilst annual leave is strictly designated to allow a worker to rest and enjoy a period of leisure. So what this means for employers is that if a worker decides not to take annual leave during a period of illness, he must be granted a replacement holiday period.

The CIPD commented that the ruling is not from the ‘real world’ and ‘risks forcing good employers to ditch relatively generous occupational sick pay schemes and opt for less generous Statutory Sick Pay schemes instead’. Ben Wilmott, the CIPD’s senior public policy adviser explained: ‘It is well established that employers should take on some of the risk of employees being sick in work time, but it is basic common sense that employees should in turn be willing to accept the risk that they may be sick on their holidays. A holiday resort tummy bug or an ill-timed cold is an unfortunate fact of life. None of us wants one, but why should employers be forced to award employees with extra holiday in compensation?’

The CIPD advises employers, in the light of this ruling to ‘clarify their absence management policies so that employees understand they will need to phone their line manager daily if they are sick while on holiday, to confirm they are still sick and not fit for work’.

A transcript of the Pereda case can be found here