Sick workers get annual leave pay entitlement

In the landmark cases of Gerhard Schultz-Hoff versus Deutsche Rentenversicherung Bund and of Stringer and others versus Her Majesty’s Revenue and Customs (Cases No. C-350/06 and C-520/06), the European Court of Justice ruled that workers do not lose their right to take paid annual leave just because they have been on long-term sickness absence. The ruling has major implications for workers on long-term sick leave and for the management of these relationships.

Interpreting leave provisions of working time directive

At the European Court of Justice (ECJ), based in Luxembourg, two combined cases sought an interpretation of rights to annual leave pay in circumstances where the individual making the claim was on long-term sick leave. One of the joined cases was a German case – Gerhard Schultz-Hoff versus Deutsche Rentenversicherung Bund – while the second case was from the UK – Stringer and Others versus Her Majesty’s Revenue and Customs.

Article 7 of Directive 2003/88/EC concerning certain aspects of the organisation of working time – known as the working time directive – gives workers an absolute right to a minimum period of annual leave and states that leave may not be replaced by an allowance in lieu. The question arose as to whether this stipulation applied where a worker had been absent from work for reasons of sickness and had therefore been unable to take annual leave, and whether that worker should have the right to an allowance in lieu of annual leave not taken, at the point in time when the employment relationship terminates.

Detail of two cases

In the German case, Gerhard Schultz-Hoff, who had a recognised serious disability, became physically unfit to work. He had thus not been able to take the holiday leave to which he would have been entitled under the directive. Under German law, once the leave year had passed, a worker could not make a claim for payment in lieu; however, Mr Schultz-Hoff, when forced to retire for reasons of ill health, claimed holidays for the two years when his illness had prevented him from taking his leave.

The UK case originally concerned a single worker Mr Ainsworth, although eventually other similar claims were added to it, including that of Mrs C. Stringer. Mr Ainsworth was absent from work on indefinite, unpaid sick leave and claimed that he should have the right to be paid in each year for the number of weeks of holiday leave which the directive provided for.

Specific and defined right to paid leave

The ECJ noted that no European Community entitlement to sick pay exists and that it was likely that, in many Member States, workers on long-term sick leave would have no pay rights. However, Community law did give a specific and defined right to paid weeks of annual leave. The ECJ accepted that Member States could have a law that prevented individuals from taking their annual leave while on sick leave but the law could not prevent a carry over of any rights to annual leave in these circumstances. Nor could it deny payment for un-taken annual leave on termination of the employment relationship. In other words, where a worker was not able to take annual leave for reasons of long-term sickness absence, the right to be paid for it remained.

Moreover, the ECJ noted that entitlement to annual leave for a worker on sick leave could not be made subject to the obligation on the worker to have actually worked in the year for which the leave is claimed, as long as an employment relationship still applies. Furthermore, if sickness deprived a worker of the ability to exercise their rights to annual leave, then the employer must give a right for the leave to be carried over or to be paid for in lieu.

Reaction of social partners

Social partners at EU level have issued no public statements on the ECJ ruling. Nevertheless, a spokesperson for the UK employer organisation the Confederation of British Industry (CBI) expressed concern over the ruling, stating ‘At a time when the economy is struggling, this judgement will ensure that staff are away from the workplace for longer’ (Financial Times, 20 January 2009).

Gender dimension of ECJ ruling

The ruling also has a gender dimension, since a number of recent research studies suggest that men and women are affected differently in relation to long-term sickness absence. Data indicate that female workers are more likely to experience such absence (see Sandanger et al, ‘Relation between health problems and sickness absences’ and Brage et al, ‘The gender gap in musculoskeletal-related long term sickness absences in Norway’).

Commentary

This judgement could have a major impact on existing sick leave arrangements. Employers may be more cautious about letting workers continue within the employment relationship, while on long-term sickness absence, if rights to annual leave pay must accompany this. The impact may be to encourage employers to terminate such employment relationships in these cases.

Sonia McKay, Working Lives Research Institute