A smart decision?
Date: 16 October 2009
Authors: Ben Collins
Issue: Vol 159, Issue 7389
Categories: Features, Employment
Employers smarting after the decision of the European Court of Justice (ECJ) in Stringer v HMRC; Schultz-Hoff v Deutsche Rentenversicherung Bund joined cases C-520/06 and C-350/06 [2009] IRLR 214 will be further concerned by the ECJ’s most recent observations on the Working Time Directive in Pereda v Madrid Movilidad SA: C-277/08.
Indeed even employees may find it difficult to decide how to manage their annual leave entitlements—the decision in Pereda is difficult to reconcile either with Stringer or the Working Time Regulations 1998 (SI 1998/1833) (WTR).
Stringer
Stringer laid great emphasis on the importance of the right to paid annual leave, which has been described by the ECJ as “a particularly important principle of Community social law from which there can be no derogations” (see BECTU C-173/99; [2001] IRLR 559; and Merino Gomez C-342/01; [2004] IRLR 407—as well as Stringer and Pereda). It stressed in particular the different purposes of annual leave (rest, relaxation and leisure) and sick leave (recovery from ill health).
As will be familiar, it confirmed the right of employees to paid annual leave even when on sick leave, leaving member states to decide how to implement that right. The post-Stringer battleground thus appeared to lie in disputes as to when employees might or might not be required to take annual leave under WTR, reg 15.
Stringer appeared to give some credence to the theory that an employer ought to be able to require an employee to take annual leave while on long-term sick absence. It is, after all, authority for the proposition that both kinds of leave can take place during the same time period.
If the Directive permits an employee to take annual leave while off sick, ran the argument, it must logically permit an employer to require annual leave to be taken in such circumstances. Indeed, such an approach would be consistent with the bar on carrying over or paying in lieu of annual leave set in WTR, reg 13(9).
Wrong approach
Pereda, however, makes it clear that this approach is wrong—and indeed suggests that reg 13(9)(a), which prevents carry over, must be inconsistent with the Directive. The court confirmed that if the worker “does not wish to take annual leave during a period of sick leave, annual leave must be granted to him for a different period”.
It follows that where an employee argues that he could not take annual leave because of illness; and seeks to carry that leave over to a subsequent year, the employer will be ill-advised to rely on reg 13(9)(a) to refuse the request. It is difficult to see how the subsection will survive without giving rise to Francovich claims.
A number of potential problems arise. How sick does the worker have to be? He might, for example, be too ill to attend work but well enough to enjoy a day of gentle rest and relaxation. Must he even then be entitled to reschedule his annual leave? Mr Pereda, for example, had a broken leg. Such an injury need not on the face of it preclude enjoyment of at least a sedentary holiday, yet he was held to be entitled to reschedule.
This approach raises the possibility of a worker phoning in sick from Ibiza with a “self-certified” stomach bug, and thereafter claiming an entitlement to reschedule a day of annual leave later in the year.
It also raises the possibility of complex factual argument as to whether an employee has “had the opportunity” to take annual leave—in any given case an employee might be said to be unfit to work but fit to go on holiday; or vice versa.
What if the time when the employee seeks to reschedule the leave is unsuitable for the employer? The employer remains in theory entitled to refuse the new leave dates, but remains subject to the overriding obligation to allow the worker the opportunity to exercise the right at some stage.
Therefore it may be that the employer’s right to refuse a particular period of annual leave is eroded as the end of the leave year approaches, such that the employee is left, in effect, with an election to carry leave over or enforce particular dates. That is particularly true if the annual leave and the sickness coincide with the end of the leave year.
Unanswered
Stringer of course left open the question whether other kinds of time off work should be treated in the same way as sickness absence for the purposes of the WTR.
If they should, then for example those on career break might argue, based on Pereda, that they must be entitled to take their paid annual leave at a time when they have an opportunity to do so, ie at the end of the break, even if the break extends over a number of leave years.
One suspects that few employers will have imagined that an employee on a two-year career break is entitled to 56 days carried over annual leave in addition to their usual entitlement when they return to work.
Only one thing is certain—employment tribunals will be kept busy filling in the detail omitted from the very broad-brush ECJ decisions.
Ben Collins, 1 Crown Office Row, Temple. Website: www.1cor.com
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