ECJ holiday ruling on sick staff on leave is bad news for employers

The European Court of Justice (ECJ) has issued a landmark decision in Pereda v Madrid Movilidad SA: it has ruled that an employee who is sick during their planned holidays has the right under the European Working Time Directive (directive) to take that leave at a later date. Employers are required to accommodate such a request, even if it means carrying leave over into a subsequent holiday year.

Ramifications

Pereda will apply in the UK, meaning staff now have the right to reallocate holidays they were not able to take due to sickness. This brings the issue of carrying holidays over back into the spotlight.

While this potentially only applies to four weeks’ holiday under the directive, the Working Time Regulations allow up to eight days to be carried over. The directive has direct effect for public sector employees, and there is now a strong argument that holidays should be permitted to be carried over. However, this may not apply to the private sector, and organisations may want to take a ‘wait and see’ approach pending further clarification from the UK Courts.

The decision is clearly open to abuse by rogue employees. The extent of abuse however is likely to correspond to an employee’s entitlement to paid sick leave. For example, an employee entitled to statutory sick pay is less likely to raise the issue than an employee with generous contractual terms.

For employers, the ruling will potentially have significant ramifications in terms of both absence levels and cost. Implications for overall absence levels could be felt widely, in particular for employers that have shut-down periods. In that case, an employer will be required to accommodate additional holidays outside the shut-down periods and, depending on cover, may need to engage additional overtime to cover the absences.

Verification

The ECJ did not discuss how sickness should be verified. However, the decision arguably opens the door for employees who become sick while on holiday to carry over their leave.

Practically, policing sick leave in such circumstances will be a problem. Currently, employers can self-certify sickness absence for up to seven days. It would therefore be prudent for them to follow the terms of their sickness absence policies before recognising sick leave – specifically, reporting sickness to an appropriate line manager within specific timeframes and, where appropriate, requesting sick notes.

Employers can generally only request a sick note after seven days. This should be applied particularly to employees claiming to have been sick while on holiday. While this may create additional costs for staff required to obtain sick notes abroad, as with normal sickness absence, employers should not be obliged to pay the employee’s costs in obtaining the sick note.

The proposed ‘fit note’ regime may however limit the implications of the decision. If a fit note is issued indicating an employee can do some work, an employer could legitimately require the employee to do that work, rather than remain at home or on holiday.

Defence

And finally, how should employers defend potential claims arising out of a refusal to acknowledge sick leave while an employee is on holiday? At this stage, an employer’s best approach is to follow their sickness absence policies consistently (for employees on holiday and at work) and ensure sufficient justification is recorded for refusing any requests.

Key points

  • UK employees who become sick on holiday can reallocate holidays they were unable to take due to illness.
  • This applies to employees who become sick before and during holidays.
  • Normal workplace practices in terms of sickness-absence reporting and providing sick notes should be applied consistently to all employees.
  • Holidays should be permitted to be carried over. The UK courts will need to reconcile this with the Working Time Directive.

Mandy Laurie, partner, Dundas & Wilson

 

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