Anomaly raised in ruling on sickness holiday pay

The Employment Appeal Tribunal has ruled that workers can take annual leave
during a period of sick leave.

The EAT in Kigass Aero Components Ltd v Brown, 25.02.2002, EAT/481/00, has
held that, under the Working Time Regulations 1988, workers on long-term sick
leave can claim holiday pay even where they have been absent from work
throughout the leave year in question and have therefore not "put in any
working time" in that leave year.

The EAT decided Brown, who did not work for the company throughout the
holiday year 1999 because of long-term sickness, was entitled to three weeks’
paid leave under the Working Time Regulations.

As he was already on sick leave, this meant that he was entitled to three
weeks’ pay, despite the fact he had exhausted his contractual and statutory
entitlements to sick pay.

Proper notice

The EAT held that the only conditions for claiming annual leave under the
Working Time Regulations are that the person is a ‘worker’ who has given the
employer proper notice to take the leave under Regulation 15.

In this case, the employers’ main argument was that annual leave meant leave
of absence from what would otherwise be ‘working time’. It appears the EAT
rejected this argument for two main reasons.

First, if the employer was correct, employees who were laid off would not be
able to take holiday during the period of lay-off.

Second, an employee who worked 46 weeks without taking any annual leave, but
then fell ill for the remainder of the year, would be denied payment for annual
leave to which his weeks of work had entitled him.

It is perhaps worth noting, however, that the purpose of regulation 13 of
the Working Time Regulations is not to provide payment, but to provide time
away from work (see Case Roundup left).

Indeed, the EAT has recognised that it was not the general scheme of the
Working Time Regulations to provide money instead of annual leave.

Practical implications

If a worker does give notice to take leave, the employer may, under the
regulations, give counter-notice to postpone the leave. However, the EAT has
ruled that employers cannot make use of this provision to totally refuse the
taking of annual leave either directly or by attempting to postpone it to a
date outside the relevant leave year so that it expires.

The full implications of this decision stretch beyond cases of sickness
absence.

The EAT recognised that its conclusions could produce "unintended
social and employment consequences".

It may no longer be practical for employers to keep staff on long-term sick
leave (without pay) since employers will potentially be liable to pay four
weeks’ salary per year just to keep the workers ‘on the books’.

The EAT commented that "employers may be driven to terminate employment
rather than letting it continue where there is a long-term sickness
absence". However, Mr Justice Lindsey, president of the EAT, commented
that this was an issue for the legislature rather than the EAT.

Employers must consider whether there might be any Disability Discrimination
Act implications before dismissing staff on long-term sick leave.

Failure to do so may cost an employer dearly since there is, of course, no
limit to the amount of compensation that can be awarded for disability
discrimination.

Employers may also risk being sued for unfair dismissal under section 101A
of the Employment Rights Act if they dismiss an employee on long-term sick
leave because that employee has sought to take annual leave.

It remains uncertain whether employers can, by notice under regulation 15 or
under a ‘relevant agreement’, require workers to treat sick leave as annual
leave.

By James Moss a solicitor at Palser Grossman

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