Jun 12

The complexities of annual leave and sickness absence.


As we approach the time of year when most employees may be hoping to take annual leave, it is worth considering the increasingly complex interaction between annual leave entitlement and long term sickness absence. Whilst straightforward, definitive answers would be much appreciated by employers and workers alike, the UK and EU case law in this area is becoming diverse and, regrettably, contradictory.
The European case of Stringer held that if a worker is absent due to ill health he or she will still accrue annual leave. That is a very clear message to employers. However, it is not without complication because it is unclear how much annual leave will accrue. Is it the full 5.6 weeks of paid leave a year (which UK workers enjoy and which equates to 28 days for a full time employee working 5 days a week) or, as per EU legislation, only a 4 week entitlement to paid leave?
Perhaps happily for employers, the courts confirmed that workers on long term sick leave are only entitled to carry over up to 4 weeks’ accrued but untaken holiday entitlement.
The law has further clarified that absent workers are entitled to this accrued but untaken leave regardless of whether or not the worker has asked to take holiday during that period of sick leave. Prior to this, it had been thought that in order to benefit the worker had to have formally requested the holiday – this is now not the case.
A further issue that has been before the courts is the question of when the accrued holiday can be taken by the worker. The options currently open to the employer are:
workers on long term sick leave must be entitled to take (and be paid for) any accrued annual leave during their time on sick leave – although the employer cannot insist that they do
workers absent for less than a year should be encouraged to take their outstanding annual leave on their return to work before the holiday year expires
·if there is insufficient time left in the leave year to enable them to take their accrued leave they should be allowed to carry this leave forward into the next leave year
an indefinite period of carry-over would become financially punitive for an employer but as yet there is no UK authority on how long a worker can carry over annual leave accrued during sickness absence – EU courts have ruled that 15 months after the end of the relevant leave year is reasonable and so it has been deemed safe to assume that sick workers should be allowed to carry over unused annual leave entitlement for a period substantially longer than the reference period in which the holiday accrued.
Employers may only pay workers in lieu of their annual leave entitlement on termination of their contract. It is important to remember that if a worker’s employment ends before having had the opportunity to take the annual leave entitlement due to sickness, the worker is entitled to a payment in lieu at the normal rate of pay for all the accrued leave including that which is carried over.

A further point to note is that if a worker has a prearranged period of annual leave and then falls sick, the worker is allowed to take their annual leave at a later date – even if this involves carrying it over to the following leave year.

However, an employer is entitled to ask for medical evidence of unfitness for work (over and above self-certification) if sickness occurs during a holiday. As it is an unusual situation, employers should make clear this applies regardless of how long the sickness lasts.

As is clearly demonstrated, this is a changeable area of employment law and until we secure further clarification from the national courts a degree of uncertainty will remain in certain areas. In the meantime, to minimise the risk of any challenge, employers need to be able to show that they have taken a reasonable and consistent approach to the various issues around sickness and annual leave set out in this note.