It is almost 10 years since the courts decided that a worker too sick to work, could continue to accrue holiday under the Working Time Regulations. That point is simple enough to understand, but numerous issues remained unresolved. As a result a huge body of UK and European cases have been brought which have filled in some – but not all of the gaps. Plus, the Government (in the consultation on modern workplaces) said that it will amend the Regulations to reflect key ECJ decisions and to provide certainty for employers. That commitment appears to be on hold, for reasons yet to be explained.
In the meantime, employers continue to struggle with issues that arise from employees absent because of long term sickness.
So what do we know?
- The right to accrue holiday only applies to working time holiday – not to any additional contractual allowances.
- If a sick employee cannot, or does not wish to take holiday during the current leave year, it can be carried over to the next leave year (even though this is at odds with the strict wording of the Regulations).
- An employee who becomes ill either before a period of scheduled leave or during that leave, must be allowed to take their holiday at another time – even if this means allowing them to carry the leave over to another year. However, employers can insist that their employees provide evidence of their illness such as a fit note or doctor’s certificate to prevent abuse.
- The right to accrue annual leave does not continue indefinitely and employers can impose a “cut off date” (more on this below).
- An employee does not have to ask to take annual leave whilst sick to preserve their right to take it at a later date, or to carry it over to the next leave year.
There are still some outstanding issues – principally – how far back can an employee carry over untaken annual leave and can employers limit carry over to 20 days required by the Directive, or to the more generous 28/29 days in the Regulations?
Our advice to clients grappling with employees on long term illness is to adopt a rather robust approach within the framework set out above. With regard to the outstanding issues, the following arguments can be used to rebut overly optimistic claims by employees.
- What limit can be applied to untaken leave?
Annual leave serves a dual purpose: first, to allow the worker to rest from their duties, and second, to allow them a period of relaxation and leisure. The courts have acknowledged that there comes a time when leave ceases to have its positive effect and is merely a period of relaxation and leisure and if allowed to go back indefinitely, it may also prevent the employee from re-integrating into the workforce. Two European cases have held that restricting carry over to 18 or 15 months from the end of the relevant leave year is sufficient.
- Restrict carried over leave to 20 days.
There is a strong argument that employers should limit carry over to 20 days rather than our more generous allowance. Whilst this point has not been determined conclusively, the Government takes the view that carry over should be limited in this way which would be in line with the requirements of the Directive.
Public sector employers have to ensure that they adhere to this framework (because of the direct effect of the Directive and ECJ decisions), but we also recommend that private sector employers do likewise as tribunals are generally bending over backwards to interpret the Regulations in line with these European decisions.