Sickness during annual leave – not as bad as it seems for employers

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Employment solicitor Zoe Bedford considers the implications of recent case law relating to sickness during annual leave.

In a timely case – given that the holiday season is upon us – the European Court of Justice (ECJ) in ANGED v FASGA and others has decided that workers who fall sick during their annual leave must be permitted to reschedule the time affected by illness. What does this case mean for employers faced with workers returning from their holiday, claiming they were affected by sickness, and how much impact is the case likely to have in practice?

Relaxation and leisure v recovery from illness

In ANGED, the ECJ emphasised the distinction between paid annual leave, the purpose of which is to enable a worker to enjoy a period of “relaxation and leisure”, and sick leave, the purpose of which is to enable a worker to “recover” from an illness that caused him or her to be unfit for work.

This decision extends an earlier ECJ ruling, Pereda v Madrid Movilidad SA, which related to sickness falling before, rather than during, a period of planned annual leave and that held the leave could be taken at another time, even if this fell after the end of the relevant leave year. It is now clear from ANGED that the point at which the sickness arises is irrelevant.

The ANGED decision

In ANGED, a Spanish collective agreement gave effect to a Spanish law allowing workers to reschedule a planned period of paid annual leave where that period coincided with a period of temporary incapacity to work as a result of pregnancy. However, it did not contain a similar provision allowing workers to reschedule annual leave owing to general ill health – something not addressed in Spanish law.

Several Spanish trade unions obtained a declaration from the Spanish National High Court that workers covered by the collective agreement were entitled to postpone paid annual leave where it was affected by illness. On appeal, the Spanish Supreme Court referred the matter to the ECJ.

The ECJ decided that, under the Working Time Directive, workers were entitled to postpone paid annual leave where it was affected by illness that rendered a worker unfit to work and any national law must give effect to this right. The ANGED’s appeal therefore failed.

Cost to employers

Going by the headlines, UK employers are greatly vexed about the adverse impact these European cases, which employment tribunals are obliged to follow, will have on their businesses at a time when they are already struggling.

The Government will not have calmed their fears by officially estimating that these ECJ rulings will cost UK private-sector employers more than £100 million per year in extra wage payments. However, given that there are about 4.5 million private-sector employers in the UK, this works out at only £22.22 per private employer, which does not seem so bad.

It is also important to remember that these ECJ rulings only apply to the four weeks’ annual paid leave required by the Directive and not to the additional 1.6 weeks’ paid leave that is purely a UK right.

Moreover, about 45% of the UK workforce is entitled to nothing more than statutory sick pay (SSP) if they are absent from work due to sickness. It will make little sense for these workers to turn paid holiday into sick leave when only SSP will be payable – and particularly because, under the SSP regime, nothing is payable for the first three days of sickness absence.

Even where employers offer enhanced company sick pay over and above SSP, this is often discretionary rather than contractual. So it is really only when contractual sick pay is available that employers will need to be on their guard against workers abusing these new rules.

Implementation into UK law

The Working Time Regulations, the UK legislation intended to implement the Working Time Directive, do not appear to allow workers to reschedule statutory holiday as required by ANGED and Pereda. Due to this conflict, the Government is proposing to amend the Regulations so that they do allow this. However, employment tribunals are obliged to follow these European decisions and will more likely than not interpret the Regulations in line with them. For this reason, UK employers should consider ANGED and Pereda as being law they need to follow now or risk being taken to the employment tribunal by workers and found in breach.

Safeguards from abuse

There is no reason why employers should not anticipate problems by tightening up their sickness certification procedures. Most employers do not expect their staff to produce a medical certificate if they are off work for less than a week. However, there is no reason why employers cannot require their workers to provide a medical certificate at their own expense covering each day of pre-booked holiday in respect of which they subsequently claim contractual sick pay. This obligation – alongside more generous new provisions on how sickness on holiday will be treated – should be set out in an updated sickness procedure and communicated to staff so they know exactly what will be expected of them if they fall sick while on holiday.

A final point is that sick pay is only payable when a worker is medically unfit to do his job. A worker who cannot, for example, fly or go swimming because of a minor ear infection, may still be fit to do his job and won’t therefore be entitled to sick pay.

Zoe Bedford, employment solicitor, Turbervilles Solicitors

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