In sickness and in holiday

Stringer and ors v Her Majesty’s Revenue and Customs

Under article 7 of the Working Time Regulations 1998, workers are entitled to four weeks' paid annual leave. But are they still entitled to holiday pay if they are off sick and not able to take their leave? In Stringer and ors v Her Majesty’s Revenue and Customs, the European Court of Justice (ECJ) said that they were.

The claimants’ union, the PCS, instructed Thompsons to act on their behalf.

Basic facts

This case concerned two different categories of workers. The first had been absent from work for several months on indefinite sick leave. During that time she told her employer that she wanted to take some annual leave sometime within the two months after her request but her employer refused.

The workers in the second category had been on long-term sick leave prior to their dismissal. As they had not taken any paid annual leave during the holiday year because of sickness and could not take it any other time, they claimed payment in lieu.

Decisions of the lower courts

The employment tribunal agreed with the workers’ claim that they were entitled to accrue and be paid for their statutory minimum annual leave entitlement, as did the Employment Appeal Tribunal following the case of Kigass Aero Components v Brown.

However, the Court of Appeal disagreed, saying that workers cannot claim holiday pay when their entitlement to sick leave has run out and that they forfeit the right to compensation for holiday not taken if their employment was terminated during the leave year.

The claimants appealed and the Law Lords referred the case to the ECJ asking:

• Does article 7 of the Working Time Directive mean that workers on indefinite sick leave have the right to annual paid leave of four weeks during a long period of sick leave
• Should that period of annual leave be paid if a worker has been off sick for all or part of the leave year in which they were dismissed and if so, how should it be calculated

ECJ decision

Holding that the right to annual leave is a fundamental social right, the ECJ made clear that the right to sick leave was not governed by community law, but by member states themselves (unlike the right to annual leave which is a community right). That meant they could either allow or deny workers the right to take leave while they were off sick.

But it added – and this was crucial – that if member states decided to prohibit workers from taking paid annual leave during the actual period of sick leave, they had to let them take their leave some other time.

And if someone is off sick, the Court said that member states cannot require them to have actually worked during that year to accrue their annual leave entitlement. They can only deny paid holiday at the end of a leave year or of a carry-over period if the worker concerned had had the chance to exercise their right to the leave.

In answer to the second question, the Court ruled that workers do not lose their right to paid annual leave at the end of the leave year if they had been off sick for the whole or part of the leave year and lost their job at the end of it, if their incapacity was the reason for losing their job.

And if the worker’s employment does come to an end, the ECJ said that they were still entitled to an allowance in lieu of the leave that they could not take (paid at their normal salary) and employers must ignore sickness absence when calculating what they are owed.

The case will return to the House of Lords probably later this year, both to consider the effect of the ECJ judgment and to decide whether a complaint about unpaid annual leave can be brought as a claim for deduction from wages.