Employees’ right to paid holidays

The statutory right to paid holidays of employees, whether employed on a full time or a part time basis, is well established both locally and in other jurisdictions of the European Union and is considered at EU level as an important principle of Community social law.

Entitlement to holiday when on sick leave has been, however, a hot topic in recent years.

In answer to this debate the Court of Justice of the European Union has handed down a couple of rulings, the first of which was the long-awaited judgement in the conjoined UK and German cases of Stringer and Schultz-Hoff. In these cases, the court upheld the right of workers to statutory holiday when on sick leave and confirmed that they are also entitled to payment in lieu of that leave upon leaving employment, even if they have been off sick for the whole of that leave year.

Another ruling in the Spanish case of Pereda followed in the footsteps of the previous case. In that decision the court ruled that a worker who is on sick leave during a period of previously scheduled annual leave has the right, on his request, to take that leave during another period. Mr Pereda, who was taken ill during a period for which he had already booked his leave to go on holiday, was granted the right to take leave after reporting back to work such that he did not miss out on his annual leave entitlement.

More recently, a case was referred by the German courts to the EU Court of Justice for further guidance in relation to leave entitlement when an employee is absent from work on long-term sick leave. In this case, Mr Schulte, a German employee, had been on sick leave for over six years. Following the termination of his employment, he brought a claim for payment in lieu of untaken leave that had accrued while he was off sick. His employer argued that his entitlement to annual leave had expired in accordance with German law. The German Appeal Court made a referral to the EU Court of Justice.

European case law to date has been interpreted as allowing the unlimited carry-over of annual leave that a worker is unable to take because of sickness. The Advocate General’s opinion did not follow this line of thinking, arguing instead that holiday entitlement for workers on long-term sick leave should be time barred.

Behind her reasoning is the fact that the health and safety objectives of the entitlement to annual leave are most effectively met by ensuring that adequate holidays are taken in the holiday year in which they accrue, since the recuperative benefits of holiday gradually reduce the more the holiday is distanced from the time when the entitlement arises.

Basing herself on these factual premises, the Advocate General opined that member states may limit the accrual of holiday leave for workers on long-term sick leave to 18 months from the end of the year in which the entitlement arose. In short, the Advocate General suggested that annual holidays and payments for workers should not accumulate indefinitely.

The question remains, however, as to how long they can accumulate. The Advocate General’s indication of a minimum accumulation period of 18 months from the end of the leave year in which the entitlement arises is discretionary on the EU Court of Justice to endorse, as is the rest of the opinion.

The opinion is usually, however, a good indication of the line the court will take in delivering its judgement.

If followed, employers will be reassured that absent workers do not continue to accrue leave entitlement indefinitely with the implications, both financial and practical, that this entails.

jgrech@demarcoassociates.com

Dr Grech is an associate with Guido de Marco & Associates and heads its European law division.