European Law Report - Employees' rights extended
The European Court of Justice recently delivered its long awaited ruling in the joined cases of Gerhard Schultz-Hoff and Stringer, which were two references made by national courts to the ECJ about the interpretation of the Working Time Directive. The...
The European Court of Justice recently delivered its long awaited ruling in the joined cases of Gerhard Schultz-Hoff and Stringer, which were two references made by national courts to the ECJ about the interpretation of the Working Time Directive.
The ECJ was asked by the German and UK Courts to rule on issues concerning the right to paid annual leave of workers on long-term sick leave. The issues at stake revolved around whether or not a worker who is absent on sick leave has the right to take paid annual leave during the period of sick leave, and whether a worker who has been absent on sick leave for all or part of the leave year concerned is entitled to an allowance-in-lieu on termination of employment.
In the UK Stringer case, employees of the HM Revenue and Customs, who had been absent on sick leave, argued that they should be entitled to four weeks paid holiday for all the time they were on sick leave. Three other English workers in the same case claimed pay-in-lieu for unused leave when their employment was terminated following a period of long-term sickness. Similarly, in the German case, Mr Schultz-Hoff, whose employment was terminated after a long-term sick leave, brought a claim in the German courts for paid annual leave not taken.
The ECJ considered both cases together as they raised similar issues. In its reasoning, the court started by noting that the Working Time Directive provides that all workers are entitled to at least four weeks' paid annual leave and that the minimum period of leave may not be replaced by a payment-in-lieu of such leave except on termination of employment. According to settled case-law, the entitlement of every worker to paid annual leave is considered as an important principle of Community social law from which there can be no derogations. Case-law has already laid down that the period of leave guaranteed by Community law cannot affect the right to take another period of leave guaranteed by that law.
On the basis of this interpretation, the ECJ considered that workers cannot be deprived of the right to paid leave when they have not had the opportunity to take it. Consequently, a worker who has been absent from work during the whole of a working year cannot be denied the right to leave for that year. The ECJ therefore made it clear that workers on sick leave do not lose their right to statutory holiday pay irrespective of the length of the sick leave since the right to paid annual leave is not and cannot be made subject to the obligation to actually work during the leave year.
Moreover, the ECJ held that a worker's right to holiday pay cannot be extinguished at the end of the leave year if the worker has not had the chance to take the holiday. Workers on sick leave would therefore be able to carry over their accrued holiday and take it in the next holiday year if they were not paid for their statutory holidays during the previous year.
On termination of employment, workers will be entitled to pay in lieu of any unused leave in circumstances where they had not had the opportunity to take it. A worker who is absent on sick leave for the entire holiday year will therefore be able to carry over his right to paid holiday pay and if he is terminated during the next holiday year, he will be entitled to be paid in lieu of all the holidays not taken at the worker's normal remuneration rate.
The court has stressed that it is for the member states to lay down, in their domestic law, conditions for the exercise and implementation of the right to paid annual leave but without making the existence of such a right subject to preconditions. Although member states are free to decide whether annual leave can or cannot be taken during a period of sickness absence, workers must either have the chance to take annual leave during the relevant annual leave year or to carry it over to the next annual leave year.
As a consequence of this ruling, workers in the EU have been granted an undeniable right to annual leave, whether or not they are on sick leave.
• Dr Grech is an associate with Guido de Marco & Associates and heads its European law division
The ECJ was asked by the German and UK Courts to rule on issues concerning the right to paid annual leave of workers on long-term sick leave. The issues at stake revolved around whether or not a worker who is absent on sick leave has the right to take paid annual leave during the period of sick leave, and whether a worker who has been absent on sick leave for all or part of the leave year concerned is entitled to an allowance-in-lieu on termination of employment.
In the UK Stringer case, employees of the HM Revenue and Customs, who had been absent on sick leave, argued that they should be entitled to four weeks paid holiday for all the time they were on sick leave. Three other English workers in the same case claimed pay-in-lieu for unused leave when their employment was terminated following a period of long-term sickness. Similarly, in the German case, Mr Schultz-Hoff, whose employment was terminated after a long-term sick leave, brought a claim in the German courts for paid annual leave not taken.
The ECJ considered both cases together as they raised similar issues. In its reasoning, the court started by noting that the Working Time Directive provides that all workers are entitled to at least four weeks' paid annual leave and that the minimum period of leave may not be replaced by a payment-in-lieu of such leave except on termination of employment. According to settled case-law, the entitlement of every worker to paid annual leave is considered as an important principle of Community social law from which there can be no derogations. Case-law has already laid down that the period of leave guaranteed by Community law cannot affect the right to take another period of leave guaranteed by that law.
On the basis of this interpretation, the ECJ considered that workers cannot be deprived of the right to paid leave when they have not had the opportunity to take it. Consequently, a worker who has been absent from work during the whole of a working year cannot be denied the right to leave for that year. The ECJ therefore made it clear that workers on sick leave do not lose their right to statutory holiday pay irrespective of the length of the sick leave since the right to paid annual leave is not and cannot be made subject to the obligation to actually work during the leave year.
Moreover, the ECJ held that a worker's right to holiday pay cannot be extinguished at the end of the leave year if the worker has not had the chance to take the holiday. Workers on sick leave would therefore be able to carry over their accrued holiday and take it in the next holiday year if they were not paid for their statutory holidays during the previous year.
On termination of employment, workers will be entitled to pay in lieu of any unused leave in circumstances where they had not had the opportunity to take it. A worker who is absent on sick leave for the entire holiday year will therefore be able to carry over his right to paid holiday pay and if he is terminated during the next holiday year, he will be entitled to be paid in lieu of all the holidays not taken at the worker's normal remuneration rate.
The court has stressed that it is for the member states to lay down, in their domestic law, conditions for the exercise and implementation of the right to paid annual leave but without making the existence of such a right subject to preconditions. Although member states are free to decide whether annual leave can or cannot be taken during a period of sickness absence, workers must either have the chance to take annual leave during the relevant annual leave year or to carry it over to the next annual leave year.
As a consequence of this ruling, workers in the EU have been granted an undeniable right to annual leave, whether or not they are on sick leave.
• Dr Grech is an associate with Guido de Marco & Associates and heads its European law division