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European Court ruling offers clarification on holiday leave accrued during sickness

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The European Court once more returned to the issue of carrying over untaken leave but also how much holiday leave employees absent due to illness should receive.

Tim Wragg, Principal Associate at international law firm Eversheds, said:"It is by now well-established that those on long term sick leave retain their legal right to minimum holiday entitlement, notwithstanding absence. Issues such as the right to carry-over leave to subsequent holiday years and for how long when it cannot be taken for health reasons, remain the subject of debate. The European Court has resisted adopting a prescriptive approach to such issues, relying on the European Working Time Directive from which the law emanates as a minimum framework of health and safety protection. However, today's judgement in the German case of Neidel v Stadt Frankfurt Am Main has set another milestone in our understanding of how the Directive is to be interpreted, clarifying how much holiday leave a sick worker can carry forward and the period within which such carried forward leave must be taken before it is lost.

"The particular case involved a retired public servant who had been absent on sick leave for a number of years and unable to take holiday due to incapacity . On retirement he claimed pay in lieu of his accrued, untaken holiday which, exceeding the minimum annual four weeks' provided for by the Directive, amounted to 86 days. Two key issues were before the court: whether his entitlement (if any) should be limited to the four week minimum provided in the Directive but also whether German law could lawfully limit the carry-over of his leave to nine months before it was deemed to lapse. The case has particular resonance for UK too as our law also provides additional minimum annual holiday entitlement of 1.6 weeks above the four week minimum requirement and currently makes no express provision for carrying-over holiday leave.

"Re-enforcing the thoughts of another European Court case in January of this year, the Court has made clear that the four weeks' of leave specified in the Directive is a minimum only and Member States are able to provide for increased holiday entitlement. In so doing, Member States are also able to lay down the conditions for the granting of that entitlement. Accordingly, the claim for additional leave was rejected. This will be of good news to the UK Government which, in its proposals for legal reform in the area the outcome of which is still awaited, had sought to restrict entitlement to leave in such circumstances to a minimum of four weeks' leave.

"The additional clarification this case brings to the subject of appropriate periods of carry-over of untaken leave is also helpful but may prompt the Government to have second thoughts on one aspect of its proposals. The Court has today rejected a carry-over period of nine months as insufficient to allow a worker staggered rest periods which are able to be planned in advance and available in the longer term. In particular it has found that the carry-over period must be substantially longer than the reference period in respect of which it is granted ie must exceed twelve months. Since the court had previously found that a period of 15 months' carry-over is likely to be adequate, the parameters for Member States and indeed employers are clearer: a carry-over period of nine months is too short whereas 15 months is probably long enough. What remains to be seen is whether the Government will now hold out for the period of 12 months carry-over it has proposed or, on the basis of today's decision and the fact such period is not "substantially" longer than a year, the Government will reconsider and propose a longer period in light of the risk a mere 12 months may present."