The European Court of Justice’s opinion in the case of Stringer and Others -v- H M Revenue & Customs (previously known as Ainsworth) is long awaited. The recent opinion of the Advocate General means that we are now a step closer to a definitive decision.
Back in February 2005, the Court of Appeal ruled that employees who had been absent on long term sickness were not entitled to claim holiday pay under the Working Time Regulations 1998 for leave years when they had not attended work. This applied whether holiday pay was claimed during the leave year or on termination of employment following a period of long term sick leave.
The Court of Appeal reasoned that the Working Time Regulations aimed to protect workers’ health and safety by giving them the benefit of leave from work. As workers on long term sick leave were not at work they had nothing to take leave from and allowing them to designate part of their sick leave as holiday was not required to fulfil the health and safety objective.
The employees appealed to the House of Lords and, around the time that the case came to be considered by the House of Lords, a German Court referred a question to the European Court of Justice regarding the right to annual leave under the Working Time Directive. That question bore similarities to the issues to be determined by the House of Lords. Given that similar matters were already to be considered by the European Court of Justice the House of Lords felt it appropriate that the issues raised in the Stringer case also be considered by the European Court of Justice.
Two questions were referred to the European court of Justice. The first issue to be determined was whether, under the Working Time Regulations, employees on long term sick leave were entitled to paid annual leave during what would otherwise be a period of sick leave and thus receive full pay rather than sick pay or otherwise.
The Advocate General’s opinion is that the right to paid annual leave cannot be subject to a worker’s capacity to work and does therefore accrue when a worker is absent on sick leave. A worker on indefinite sick leave can request a future period of annual leave but cannot take holiday whilst they are on sick leave.
The second issue to be determined was whether where there is provision for payment in lieu of accrued and unused holiday on termination of employment, as there is in the UK, and the worker’s employment has been terminated following a period of long term sick leave for all or part of the annual leave, should they receive payment in lieu of annual leave and how should it be calculated?
The Advocate General’s opinion was that on termination of employment workers are entitled to payment in lieu of annual leave that is accrued and untaken due to the worker having been on long term sick leave. The worker is entitled to that payment at their normal full rate of pay as opposed to the rate of pay on termination of employment which may be sick pay or less.
Turning to the German case of Schultz-Hoff -v- Deutsche Rentenversicherung Bund which was also considered by the European Court of Justice, the Attorney General gave its opinion on the question whether annual leave untaken at the end of the leave year due to sickness absence expired at the end of the leave year. The Attorney General concluded that the worker must be able to take their leave year on return to work, even if that is in the next leave year.
Both cases will now proceed to a full hearing before the European Court of Justice. The Advocate General’s opinion gives a good indication of what the Court’s ruling will be because the Court has in the past tended to follow the Advocate General, but that is not without exception. The European Court of Justice’s Judgment is expected in around six months’ time following which the issue and application of the Court ruling in the UK may be further considered by the House of Lords.
For employers who have been applying the original Ainsworth decision but consider caution to be appropriate following the Advocate General’s opinion, it may be wise to review current policies prior to the ruling of the European Court of Justice. For those both claiming and responding to holiday pay claims, Employment Tribunals are, in our experience, staying those claims which turn on the decision of Stringer until a definitive position has been reached.
Veronica Colegate · February 12, 2008