Stringer vs HMRC is a long-running saga, having been referred by the English courts to Europe (the ECJ) and then back to the House of Lords. It deals with circumstances of long- term sickness - where an employee is on sick leave for so long that he does not take his holiday leave for that year. This case has determined that where an employee is prevented from taking holidays in one year then he is entitled to carry those forward to the next year. Also, where an employee has his employment terminated following a period of sickness he is entitled to payment for the holidays he has not taken and can bring a claim of unpaid wages for these.
Pereda vs Madrid Movilidad SA is also relevant to cases concerning shorter-term sickness. The ECJ decided that a worker who is sick during a period of previously scheduled statutory holiday should, as far as the Working Time Directive is concerned, have the right to schedule their holiday to a later date. This month has seen the first UK employment tribunal decision applying the ECJ Pereda decision. In Shah vs First West Yorkshire Limited, the employment tribunal considered the circumstances of an employee who had booked holidays but then became ill. This was near the end of the employer's leave year and so the employee was unable to book new holidays in that leave year and was told he had lost his entitlement. Mr Shah brought an employment tribunal claim, claiming his lost holiday. The employment tribunal allowed his claim, relying on the Pereda decision.
There are still some issues to resolve around the enforceability of these provisions, particularly concerning private-sector employers. However, the case law is in the main clear and an amendment to the UK's Working Time Regulations to give proper effect to these decisions is also expected. Some of the more practical issues for employers arising from these decisions are considered below:
Can employers choose not to believe employees who claim to be ill during their annual leave?
Some employers will be suspicious of employees who claim to fall ill during a holiday and so ask for another holiday, particularly where the employee has an entitlement to full pay during sickness and holiday. However, it is difficult to contemplate challenging an employee unless there is some reasonable evidence for doing so. Employment relationships require mutual trust and, as with other periods of sickness, employers should generally take at face value the information from an employee that he is sick.
What does sick mean?
Usually this is obvious but some employees on holiday may overindulge to an extent that they would not during a working week - on food, alcohol or sunshine. Does a day of genuine sickness following holiday indulgence then entitle an employee to another holiday? There is no easy answer to this but employers who anticipate these issues may want to address this in their sickness procedures and/or consider options below.
How will employers react?
Many will simply hope that these cases do not create much more time off, while those who operate Statutory Sick Pay (SSP) only are unlikely to feel too concerned by this given that the first three days of sickness will be unpaid. Those employers that enforce discretionary schemes might choose not to exercise the discretion to pay for sickness absences during holidays while employers with contractual sick pay benefits might consider amendments to sick pay schemes to ensure that sickness during holiday is paid as SSP only.
These various approaches may deter employees from raising the issue of sickness during a holiday period although if they did, as the law currently stands they would be entitled to rearrange their holiday leave. Whatever the preferred approach, all employers are advised to review their current arrangements to ensure that their policies recognise this legal change.
Mark Leach is a partner in the employment team at law firm Weightman