The European Court of Justice today delivered its judgment in Stringer, Ainsworth and others v Commissioners of Inland Revenue, Case No. C-350/06, following the referral of questions to it from the House of Lords.
The case concerned how the right to paid annual leave under the Working Time Directive, 2003/88, implemented in the UK by the Working Time Regulations 1998, operates in the circumstances in which workers are on long-term sick leave. The Court was asked to decide two questions. The first was whether a worker on indefinite sick leave could exercise the right to take annual leave. The second was whether a worker who had been sick for all of a leave year was entitled to a payment in lieu for untaken annual leave on termination of employment.
Holding that the right to annual leave is a fundamental social right, on the first question the Court ruled that, under the Directive, national law could either permit a worker to take leave while he or she was off sick or could deny the entitlement to take leave while off sick. But it added – and this is the critical point - that if national law prevented a worker off sick from taking annual leave, the worker must have the opportunity to take that leave at another time (paragraph 29). Currently, under UK law there is no right to carry over annual leave to the following year (see regulation 13(9)), so that a worker off sick who is not allowed to take leave in a particular leave year will simply lose the right at the end of the leave year.
This means that, in order to comply with the Directive, employees on indefinite sick leave must be allowed to take annual leave while they are sick; otherwise the worker will never have the opportunity to exercise the right at all. Alternatively the government will need to amend the Regulations to permit the carrying over of annual leave for those employees who cannot take it because of sickness.
On the second question, concerning the right to a payment on termination, the Court said that the right to annual leave is not lost because a worker happens to be sick for the whole of the leave year prior to termination and so has not been able to exercise the right to annual leave. It follows that an allowance in lieu, based on normal wages, must be paid to such a worker on termination of employment. Employers must, therefore, pay the allowance in lieu under regulation 14 of the Working Time Regulations to workers off sick for the whole of the leave year, and must ignore sickness absence in the calculation of the sum due. The ruling of the European Court effectively overturns the decision of the Court of Appeal in the proceedings.
The case will return to the House of Lords probably later this year, both to consider the effect of the judgment of the European Court of Justice and to decide whether a complaint about unpaid annual leave can be brought as a claim for deduction from wages.
The workers in the case were members of the PCS whose claim was supported by the union. Chris Jeans Q.C and Michael Ford were instructed by Thompsons.
The link to the decision on the ECJ website is: http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=EN&Submit=Rechercher$docrequire=alldocs&numaff=C-350/06&datefs=&datefe=&nomusuel=&domaine=&mots=&resmax=100
