Long Term Sickness and Paid Holidays

Helen O'Brien writes:

Sick of holiday pay issues?

“I have an employee that has been on long-term sick, can we carry leave over or not?” Amy Paxton, Senior Employment Consultant at Croner discusses the latest developments of the on-going issue of long-term sickness and paid holiday.


1. What the Regulations State

There is no legislation on the relationship between paid holiday and sickness absence. The European Working Time Directive (WTD) allows four weeks’ annual leave (20 days for the five-day week). Under the Working Time Regulations (Northern Ireland) 1998 (WTR), employees and workers are now entitled to an aggregate of 5.6 weeks (28 days) annual leave in each leave year, including public holidays.

The entitlement (the original four weeks in the Directive) must generally be taken during the leave year to which it applies. There is no automatic right to carry leave over into another year — although up to 1.6 weeks may be carried forward to the following year, provided this is specified in the employment contract or agreed by the employer. Unused contractual leave entitlement, however, (i.e. that in excess of the statutory) may be carried over into a new leave year.


2. Effect of Judgments from the European Court

These entitlements under the WTR have been complicated by a number of judgments in the Court of Justice of the European Union (previously the European Court of Justice) relating to the interaction of annual leave with sick leave, maternity leave and parental leave in the context of the WTD. These judgments established that workers continue to accrue WTR holiday during sick leave, and that workers are allowed to carry over their paid annual leave into another year if sickness has prevented them from taking a holiday.


3. The Particular Problem of “Carry Over” of Annual Leave

As already mentioned, the right to carry over holiday under the WTR is limited. The problem is that they do not allow for a carry-over as envisaged in the European judgments — that workers who have not had the opportunity to take their annual leave because of sickness absence, maternity or parental leave in the current leave year, must be able to carry it forward into the following leave year. The Regulations are silent on the issue of reallocating holiday at another time if it coincides with sick leave.


4. Government Proposals

In 2011 the Government published proposals to amend the WTR in order to make the Regulations compatible with the European Court decisions described above. The proposals in the Government’s “Consultation on modern workplaces” make it clear that workers who are unable to take holiday, or who fall ill during pre-planned holiday, can carry the holiday forward into a subsequent year if they cannot re-schedule it in the current leave year.

Where someone has been on sick leave, the Government proposes to allow employers to limit the ability to carry over annual leave to the four weeks of leave required under the WTD (i.e. excluding the additional 1.6 weeks required by the WTR and any further contractual leave).

Other proposals include allowing employers to require workers to use up holiday accrued in the current leave year, where there is the opportunity to do so, and giving employers the right to require workers to postpone taking their holiday until the next leave year, if there are good business reasons for this.

The Government is expected to publish its response to the consultation in May 2012.


5. What should employers be doing?

The problem for employers is complicated by the fact that an employment tribunal may follow the European case law or interpret strictly the legislative position under the WTR; indeed, there are conflicting Employment Appeal Tribunal (EAT) decisions from GB on the issue.

The line of least resistance would be to allow workers to carry over their paid holiday entitlement, subject to the results of the Government consultation.

In the meantime, some other practical measures that employers might consider taking include:

• require sickness notification from employees on holiday and medical evidence for absences longer than the current four-day self-certification period;
  
• refuse to reschedule holidays unless the illness made the employee unable to do his/her job; and
  
• limit holiday carry-over for employees off sick to statutory rather than contractual holiday.