Two recent European Court of Justice (ECJ) cases - Stringer v HM Revenue and Customs and Pereda v Madrid Movilidad SA - have clarified the relationship between sick leave and paid annual leave under the European Working Time Directive.

The Court has determined that:

• Statutory entitlement to paid annual leave continues to accrue over periods of sick leave, even if the employee remains on sick leave for the entire year and does no work.
• Employees can take their statutory annual leave at the same time as their sick leave and still receive their standard rate of pay.
• Any payments made in lieu of leave on the termination of a worker’s employment must include any untaken statutory annual leave, even when that employee has been on sick leave for the entire duration of the leave year.

In the Stringer case, the practical effect of the judgement is that employees may be able to may be able to make a holiday pay claim to their employer under the deduction from wages provisions of the Employment Rights Act 1996, and not just under the 1998 Working Time Regulations.

The Pereda case determined that, should an employee fall sick shortly before a period of pre-arranged annual leave, they can request to take the period of annual leave that coincided with their sickness at a later date. The ECJ decided that an employee who has been off sick for all or part of the leave year and has missed their annual leave must be able to carry their leave over into the next year.

Taking the two rulings in combination, the upshot is that workers can decided to take their statutory annual leave at the same time as their sick leave, or they can choose to take their missed annual leave at a later date instead.

The Department for Business, Innovation and Skills will hold consultations on possible amendments to the Working Time Regulations in the light of these rulings.

Technorati Tags: Annual Leave, Sick Leave, Working Time Directive