Holidays during sickness absence
TRIBUNAL FINDS HOLIDAY DURING SICKNESS COULD BE CARRIED OVER TO NEXT YEAR
An article on Shah v First West Yorkshire Limited ET/1809311/09.
Annual leave under EU and UK law
Article 7 of the EC Working Time Directive 2003/88/EC (the Directive) provides that member states must “ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice” (Article 7(1)). These provisions are implemented in Great Britain by regulations 13 to 16 of the Working Time Regulations 1998 (SI 1998/1833) (WTR), which give workers the right to 5.6 weeks leave per year. At least four weeks of that leave can only be taken in the leave year to which it relates (regulation 13(9)(a)). A relevant agreement may provide for the carry over of all or any of the remaining leave (regulation 13A(7)).
The right to annual leave during long-term sickness absence
In the conjoined cases of Stringer and others v HM Revenue & Customs; Schultz-Hoff v Deutsche Rentenversicherung Bund  IRLR 214 the ECJ ruled on the effect of long-term sick leave on a worker’s right to annual leave under the Directive.
The European Court of Justice (ECJ) confirmed that a worker on sick leave accrues annual leave despite not working, but held that it is for member states to decide whether a worker can take their annual leave during a period of sick leave. A worker on sick leave who has been unable to take annual leave must be allowed to take it following their return to work, even if this means carrying it over to another year.
In Pereda v Madrid Movillad SA C-277/08 the ECJ made it clear that a worker who is incapacitated during a period of previously-scheduled statutory holiday should, as far as the Directive is concerned, has the right to reschedule the holiday to a later date. Moreover, if the worker remains sick until the end of the relevant leave year, the Directive requires him to be allowed to reschedule that holiday in the next leave year.
Interpreting domestic legislation in line with a directive
Under the principle of indirect effect, a national court is required to interpret national law, “so far as possible, in the light of the wording and purpose of [a relevant EC directive] in order to achieve the result pursued by [the directive]” (Marleasing SA v La Comercial Internacional de Alimentacion SA, Case C-106/89  ECR I-4135).
In EBR Attridge Law LLP and another v Coleman No (2) UKEAT/0071/09 the EAT considered the circumstances in which a court or tribunal can find it “possible” to interpret domestic law in line with a directive. In Coleman the EAT concluded that there was nothing “impossible” about adding words to the provisions of the Disability Discrimination Act 1995 (DDA) so as to cover associative discrimination. Although such an addition would change the meaning of the DDA, this did not make it impermissible as the real question (identified by the House of Lords in Ghaidan v Godin-Mendoza  AC 557) was whether the new meaning was compatible with the “underlying thrust” or “scheme” of the domestic legislation.
Mr Shah booked four weeks’ holiday from 22 February to 21 March 2009. As he worked three days a week, this accounted for 12 days of his annual holiday entitlement. The relevant holiday year under his contract of employment ran from 1 April to 31 March. In January 2009 Mr Shah broke his ankle and was absent from work between 15 January to 18 April 2009. His sickness absence, therefore, overlapped with his booked period of holiday. However, during this absence he received contractual sick pay and was also paid holiday pay, at a higher rate, for the twelve days leave he had booked. On 4 April 2009 he wrote to his employer, First West Yorkshire Limited (FWYL), asking to reclaim his 12 days’ holiday. FWYL responded on 21 May that the holiday could not be reclaimed as it related to a previous holiday year and had therefore been “lost”. On 16 September 2009 Mr Shah submitted a claim for loss of holiday under the WTR and unlawful deduction from wages under section 13 of the Employment Rights Act 1996. FWYL argued that:
- The tribunal had no jurisdiction to hear Mr Shah’s claim because it had been submitted more than three months after the date on which the holiday should have been taken and was therefore out of time.
- Regulation 13(9) of the WTR requires leave to be taken in the current holiday year only.
The tribunal upheld Mr Shah’s claim. It made a declaration (under regulation 30 of the WTR) that FWYL had refused to permit Mr Shah to exercise his rights under the WTR by refusing him to take his accrued holiday in the following holiday year when he was prevented from taking it in the current leave year. The parties agreed that the claim should be adjourned for three months (until 20 February 2010) to allow time for settlement. If there was no settlement of the claim by that date, the tribunal would consider awarding compensation under regulation 30(3)(b) of the WTR.
The tribunal held that the claim had been submitted in time. Mr Shah’s written complaint counted as a written grievance for the purposes of the statutory dispute resolution procedures and so he was entitled to an extension of three months to submit his claim. Although not dealt with by the tribunal, it would appear that the Employment Act 2008 transitional provisions applied in this case as the action on which the grievance was based began before 5 April 2009, continued beyond that date and Mr Shah had presented his grievance before 4 July 2009.
WTR can be interpreted in line with Pereda
The tribunal noted that Mr Shah’s primary claim was for his lost holiday entitlement, rather than unlawful deductions from wages. In any event, Mr Shah accepted that if he was successful in carrying over the 12 days’ holiday to the next holiday year, he may be required to repay the corresponding holiday pay received during his sick leave. The tribunal held:
- It was clear following the ECJ’s decision in Pereda (see Background, above) that in order to comply with the Directive, national law must permit an employee who falls sick during a period of annual leave to take that annual leave subsequently, within the current holiday year, or if time does not permit, within the following leave year.
- If it was not permissible to construe regulation 13(9) of the WTR in such a way, Mr Shah would be left with a Francovich claim against the Government for its failure to implement the Directive properly. This would be an inadequate remedy for Mr Shah as, at most, it might financially compensate him but it would not require FWYL to permit him to carry over his leave.
- The primary health and safety purpose of regulation 13(9) is to give workers paid periods of holiday regularly throughout the year and prevent them from storing it up or taking lengthy periods of extended leave. It is entirely consistent with that primary purpose for workers who have fallen ill and have consequently been unable to take their leisure, to be allowed to take their leave, if necessary, in the following year, as Pereda requires.
- It was entirely consistent with “the underlying thrust” of the WTR to add words to regulation 13(9) to cover the “limited and special situation” dealt with in Pereda.
The tribunal therefore construed the WTR by adding the words set out below. Read this way, Mr Shah was entitled to take the holidays which he was prevented by ill-health from taking in March 2009 at some subsequent time in the following leave year.
Words added to the end of regulation 13(9) of the WTR by the tribunal
“Save where a worker has been prevented by illness from taking a period of holiday leave, and returns from sick leave, covering that period of holiday leave, with insufficient time to take that holiday leave within the relevant leave year; in which case, they must be given the opportunity of taking that holiday leave in the following leave year”.
Following Pereda, employment practitioners and commentators anticipated whether (and, if so, to what extent) tribunals would be prepared to give the WTR a purposive interpretation consistent with that decision. This is the first case in which a tribunal has given effect to Pereda. As Mr Shah’s position was “essentially the same” as Mr Pereda’s (as acknowledged by the tribunal), it would have been surprising if the tribunal had not considered itself bound to follow Pereda. In interpreting the WTR, the tribunal adopted the same approach as the EAT in Coleman (see Interpreting domestic legislation in line with a directive, above). As the strict language of regulation 13(9) of the WTR itself makes it impossible to give the WTR a purposive interpretation in line with Pereda, the tribunal read in additional words. However, while the EAT’s interpretation of the DDA in Coleman is binding on tribunals and the EAT, the tribunal’s interpretation of the WTR in Shah is not. Nevertheless, in light of the incompatibility between regulation 13(9) and the Directive (as reinforced by Pereda), it seems likely that tribunals will apply this decision.