Mark Ellis Blog

Back in February I bemoaned the nonsense that is holiday accrual through sickness periods.

Well employers have waited for years for the House of Lords to put some clarity into the issue and in the light of these trying times for employers hopefully inject some sanity and help out beleaguered employers.

Well the long awaited and anticipated decision in Stringer v HMRC was promulgated a couple of weeks ago and Employers and Respondent employment lawyers pored over the sagacious and erudite opinions of the Law Lords to hopefully obtain the final decree on this contentious area, after years of uncertainty, namely in which circumstances, if any, should employees accrue holiday entitlement at a time when they are not actually at work but are instead on long term sickness absence.

Many will have forgotten the long and tortuous route of Commissioners of Inland Revenue v Ainsworth/Stringer and others which set out on its journey with knapsack over shoulder in 2002. How many remember the other 2 co-Respondents in the Ainsworth/Stringer case, Mrs Kilic & Mr Thwaites. Remember those last two names to impress your friends & colleagues at a Christmas Party Employment Law Trivia quiz.

Well we have looked and looked and no it would appear that the Law Lords must have missed a bit because all we got was the unhelpful decision that holiday pay claims can also be pursued as section 23 Employment Rights Act 1996 claims (unlawful deductions claims) as well as under the Working Time Regulations 1998 and as such a whole series of claims can be linked so long as the last deduction made was made within 3 months of the claim being lodged.

Well, without sounding ungrateful to Lord Hope of Craighead, Lord Rodger of Earlsferry, Lord Brown of Eaton-Under-Heywood, Lord Walker of Gestingthorpe and Lord Neuberger of Abbotsbury, thanks for nothing, hopefully none of them have to employ anybody and attempt to understand why a potential employee off work sick for 10 ½  months can then come back to work and seek to take the next 6 weeks off on full holiday pay and at a time when employers are being crippled with diminishing order books and redundancy payments. Even worse could an employee who has been ill for say, 2 years, is then deemed fit for work, then at the end of that period take all of their holiday entitlement for those 2 years, potentially 56 days at the end of that period?

So after years of hopeful anticipation we are all none the wiser and it would seem we have potentially reverted back to the default position set out over 7 years ago under the Employment Appeal decision of Brown v Kigass Aero Components Ltd.

The bad news for employers is that under the Kigass case it was decided that to accrue holiday entitlement an individual does not need to have actually done any “work” in the truest sense of the word or actually physically been present in the workplace, so long as they were “workers” and working under a “contract of employment/workers contract.” As such any employee on “sick leave” accrues paid holiday entitlement during any such period in the normal manner and therefore upon eventual return can take that holiday in the usual manner and upon termination should be paid in lieu of all accrued but untaken holiday entitlement. One saving grace at that time for employers from the Kigass decision was that holiday untaken by the end of the holiday year was lost and extinguished for ever. In the light of the European Court Judgment back in January of this year and in relation to the consolidated cases of Schultz-Hoff/ Stringer, the ECJ left it open for employees to be able to carry over untaken holiday entitlement from one year to the next if they have been unable to take it in the relevant holiday year. The ECJ seemed also to suggest that being sick means you are unable to take holiday and therefore by the very nature of being off sick you are unable to take your holiday and therefore you should be entitled to roll-over entitlement into subsequent years and circumvent any national limitation to this; in the UK this limitation comes in the form of Regulation 13(9) of the Working Time Regulations which expressly prohibits “carry-over.” This provision has been thrown into some doubt now with the ECJ’s Judgment and the House of Lords failing to address this matter.

Also put in a state of flux is the possibility that employers could request a worker on sickness absence to take any holiday during the relevant period of sickness. This is expressly provided for under Regulation 15 of the Working Time Regs but the ECJ has in a throw-away comment manner suggested that sickness absence and holiday entitlement are 2 very different worker entitlements and “never the twain” shall meet and that an employee cannot possibly take “holiday” in the true, meaningful sense of the word if they are off sick recouperating from sickness.

What we are left with then, despite the 2 highest forums having been expressly requested to revisit this legal minefield is, in short, an absolute mess for employers and employees alike. And what we are facing is Tribunal meltdown as potential claims going back 6 years for untaken holiday’s as a result of sickness breach the dam’s floodgates and hit the Employment Tribunal system.