Weekly dilemma: Holidays and sickness

One of my employees recently went on her two-week summer holiday, but rang up halfway through to tell me she was sick. She’s back at work now, but has requested to take the period of annual leave during which she was sick at another time. Do I have to agree to her request, or can I refuse?

Unfortunately the legal position on this question is unclear due to recent case law on annual leave – under both the European Working Time Directive (WTD) and the domestic legislation that implements the WTD, the Working Time Regulations (WTR) – for workers who are off sick.

The first development was the European Court of Justice and House of Lords decisions in Stringer and others v HMRC, which confirmed that employees on sickness absence continue to accrue leave under the WTR. This was followed by Pereda v Madrid Movilidad, in which the ECJ decided that where pre-arranged leave under the WTD coincides with a period of sickness, the employee must have the option to designate an alternative period for their leave instead, which could include carrying the leave over to the next leave year. The Pereda decision is, on the face of it, inconsistent with the WTR.

UK courts are obliged, where possible, to interpret domestic law in line with EU law. In the recent case of Shah v First West Yorkshire Limited an employment tribunal applied Pereda, and decided that a worker who was sick during pre-arranged WTR leave should be permitted to carry over his lost leave to the next leave year.

Shah is a first instance tribunal decision and is therefore not binding on other tribunals. Considerable uncertainty remains about how tribunals will decide similar cases where the inconsistencies between Pereda and the WTR come in to play. The situation is slightly different (although still unclear) for workers in the public sector, as they may be able to rely on the WTD in a domestic tribunal claim because of the direct effect of EU law. Binding case law authority (from the EAT or above) addressing the areas of uncertainty is eagerly awaited.

The current state of the law means that you can choose whether or not to agree to the request, although a refusal would carry the risk of a claim. Either way, it would be sensible to introduce a policy that clearly sets out how sickness during leave will be dealt with (or amend your existing annual leave policy to that effect). If you decide that employees should be allowed to reschedule annual leave that coincides with sickness absence, then your policy should cover matters like notification requirements and pay for sickness absence during leave. You should, of course, be ready to amend your policy as the law in this difficult area develops.

David Brown, associate, Simpson Millar LLP

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