28 November 2011 #Employment
Back in July we reported on the German case of KHS AG v Schulte (2011) in which the Advocate General handed down an Opinion stating that the right to accrue holiday whilst off on long term sick leave is not unlimited, and can extinguish at a certain point after the end of the relevant holiday year.
This case has now been decided by the ECJ which has broadly agreed with the Opinion of the Advocate General.
Therefore, national rules (such as those in Germany) limiting carry-over of statutory holiday by workers on long-term sick leave, after the end of the relevant leave year, are lawful under the European Working Time Directive. The ECJ held that there must come a time when one of the purposes of the leave (to give the employee a break from work) can no longer be met. In this case, expiry of annual leave entitlement 15 months after the end of the leave year was sufficient.
Sadly, this judgment still leaves some questions unanswered. The court suggested at one point that the carry-over period must be "substantially longer than the reference period in respect of which the leave is granted". In other words, where leave is allocated on a yearly basis, carry-over must be "substantially longer". Unfortunately, no guidance on what is “substantially longer” was offered.
Moreover, this case still doesn’t resolve the issue of the difference between the European Working Time Directive, and our own Working Time Regulations 1998, which prevent carry-over of leave from one year to the next. In May 2011, the UK government announced its intention to review the WTR. It will now need to decide on whether to implement a provision limiting carry-over of holiday to a certain length of time.
Interestingly, one of the judges sitting in the ECJ held that the entitlement to paid holiday cannot be undermined by imposing conditions on the employee that are difficult to meet. In light of this, the EAT’s recent decision in Fraser v St George’s NHS Trust (2011), which held that an employee absent on sick leave still had to give proper notice to be entitled to paid annual leave, now looks a bit shaky.
Updated guidance regarding this complex area will be coming soon on Buddy, so watch this space.