Holidays

Dealing with sickness absence is one of the trickiest and most expensive issues for employers to manage – as the recent review over who should sign employees off work highlights. One of the most vexed questions has been what happens to holiday rights when a worker is on sick leave. In this case the European Court of Justice has given some helpful guidance to employers.

In a decision at odds with a similar case on the vexed issue of holidays and sickness, the EAT has held that an employee on long-term sick leave must actually have requested annual leave (in accordance with the Working Time Regulations) during the leave year in question to be entitled to be paid for it.

This seemingly straightforward question has ended up in the European Court of Justice. The case concerned BA pilots and whether, when they were on leave, their holiday pay should be calculated on the basis of their basic salary or whether it should also include other allowances on top of their basic pay. The ECJ held that their holiday pay must include extras ‘linked intrinsically to performance of tasks’ but not ‘occasional or ancillary costs’.

A short but important point from a practical standpoint on the vexed issue of holiday accrued while an employee is off sick. The EAT has held that a worker who is absent sick for the whole of the leave year is entitled to be paid annual leave during that year - even where he or she hasn’t submitted a request to take such leave.

EU member states can provide for holiday entitlement accrued by workers on long-term sick leave to expire no earlier than 18 months after the end of the holiday year in which it arises. This is according to the Advocate General (AG) of the Court of Justice – the first stage in a decision on a German case concerning a Mr Schulte who had accrued several years of holiday entitlement whilst off sick. While not binding on the Court of Justice, the AG’s view is often accepted by the court.

An employment tribunal in Edinburgh has given a ruling covering two contentious areas of law regarding holiday pay: the taking of and payment for accrued holiday pay for someone on long-term sick leave, and what holiday pay someone may be entitled to if they are also receiving benefits under a PHI policy. Employers can take encouragement from the tribunal’s application of some practical limitations on the right to accrue holiday pay.