Government issues guidance on interaction of annual leave and sick leave after ECJ rulings

The Department for Business, Innovation & Skills has issued guidance on the interaction of annual leave and sick leave after two key European Court of Justice rulings.

The Department said the ECJ ruling in Stringer had the following effect:

• Statutory entitlement to paid annual leave continues to accrue during sick leave, even if the employee is on sick leave for the whole year and does no work
• Workers can take their statutory annual leave at the same time as sick leave and receive their normal rate of pay
• Payments in lieu of leave upon termination of employment must include any untaken statutory annual leave even if the employee has been on sick leave for the whole of the leave year.

The Stringer case then returned to the House of Lords. According to DBIS, “the practical effect of its judgement is that a worker may be able to make a holiday pay claim under the deduction from wages provisions of the Employment Rights Act 1996, not just under the Working Time Regulations 1998.”

The ECJ meanwhile ruled in the case of Pereda that where a worker fell sick shortly before pre-arranged annual leave, the worker can request to take the period of annual leave which overlapped with sickness as annual leave at a later date.

It also ruled that a worker who has been on sick leave for the whole or part of the leave year and has not had the opportunity to take the leave, must be allowed to carry-over that leave into the next leave year.

“The combined effect of the rulings is that a worker can choose to take their statutory annual leave at the same time as sick leave, or the worker can choose to take the missed annual leave at a later date,” DBIS said. “A worker who has missed out on statutory annual leave due to sickness, may be able to carry-over the missed leave to the next leave year.”

The government said it would consult on possible amendments to the Working Time Regulations in light of the ECJ rulings.