healthcare update - issue eight
Holiday pay and sickness absence - are the rules any clearer?
Overlapping periods of sickness and annual leave have for some
time now caused confusion for employers and employees alike.
Although employers can specify the rules that apply to contractual
holiday, what rules apply to the minimum periods of leave under the
Working Time Regulations 1998? As we reach the end of 2009, are
things any clearer?
Does holiday accrue during periods of sickness
absence?
Probably. The Employment Appeal Tribunal has previously ruled
that it does accrue but the Court of Appeal in Stringer
held that it did not. Both the European Court of Justice (ECJ) and
the House of Lords appear to assume (without argument on the point)
that holiday entitlement does accrue. However, this was not
expressly stated in the House of Lords decision.
Can holiday be taken during periods of sickness
absence?
This is still unclear. The outcome of the ECJ’s decision in
Stringer is that this issue depends upon the national laws
that apply. The House of Lords did not, however, decide whether UK
law does prevent employees from taking annual leave whilst off
sick.
Can an employer prevent employees taking holiday during
sick leave?
Potentially, yes. Subject to contrary provisions within a
relevant agreement, an employer can serve a counter-notice to an
employee who has requested annual leave, preventing them from
taking leave on the days requested. This is only likely to be of
financial benefit to the employer if the employee is seeking to
take annual leave after the expiry of contractual sick pay and is
likely to return to work in that leave year. An employee may try to
argue, however, that a refusal of holiday, simply to save money,
amounts to a fundamental breach of trust and confidence, entitling
the employee to resign and claim constructive dismissal.
What if an employee becomes sick whilst on
holiday?
According to the ECJ in Pereda, an employee who is sick whilst
on annual leave has the right to take that annual leave at another
time. Further, in Pereda, it appears the employee applied for a new
period of annual leave over a month after his return to work. If
this is correct, employees would not need to specifically cancel
their booked annual leave if they become sick but could exercise
their right to reschedule that leave at a later date.
Can holiday entitlement carry over from one year to
another?
The ECJ in Pereda confirmed that if an employee cannot take
their leave in a particular leave year, they must be allowed to
carry the leave forward.
Since Pereda is an ECJ decision, is it binding on NHS
organisations?
This is not clear. Employees within the public sector can often
rely on the principle of direct effect. This means that they can
rely on the wording of the European directive (as interpreted by
the ECJ) even if the national legislation does not implement those
provisions adequately. However, for the principle of direct effect
to apply, the provisions need to be unconditional, sufficiently
precise and not give member states substantial discretion in their
application.
The Court of Appeal has previously held that the holiday
provisions of the European directive do not have direct effect.
However, more recent case law has suggested the opposite. There
will no doubt be further case law on this issue!
What should NHS employers consider?
As a result of the generous NHS sick pay provisions, NHS
employers are more likely to face retrospective claims of illness
from employees wishing to switch annual leave to sick leave than
private sector employers.
The first step would be to review policies relating to sickness
absence and holidays. Employers may wish to consider requiring
employees on annual leave to continue to comply with obligations to
notify them on the first day of any sickness absence. They should
also require employees to provide medical certificates for any
periods of sickness absence incurred whilst on holiday although
this requirement may be difficult for employees holidaying abroad
to meet.
Employees on long-term sickness absence will need to be
carefully managed to avoid the expense of accruing holiday.
Dismissals would be fair, provided that the employer has reached a
point where it cannot reasonably be expected to wait any longer for
the employee’s return, and has followed a fair procedure. Employers
would also need to comply with their obligations under the
Disability Discrimination Act 1995.
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