Employment Law Advocates » Blog Archive » Holiday pay while sick

Since the ruling of the European Court of Justice in the Stringer case last year, several employees have been claiming holiday pay for periods of sickness going back a number of years. This seems unfair on employers for a number of reasons. Firstly, the employers would not have been aware at the time that holiday pay was likely to be owed. Secondly, this result effectively punishes employers who have acted generously in retaining staff on long-term sick leave, while less patient employers would have dismissed them long ago.

Despite this, some tribunals seem to have reached to the conclusion that they are obliged to award holiday pay in these circumstances, a recent example being a case involving a Yorkshire-based haulage company. This follows the first instance decision in Rawlings v The Direct Garage Door Company earlier in the year. However, it is worth noting that the Employment Appeal Tribunal has yet to rule on the issue and neither decision is binding.

In fact, there is a persuasive argument for saying that holiday pay should not be awarded in these circumstances. For one thing, the Stringer judgment does not require that Member States must allow unused holiday pay to be carried over when an employee is sick. It says that they must either allow holiday pay to be carried over or they must allow employees to take holiday and be paid for it while they are sick. The latter was the favoured solution of the Employment Appeal Tribunal in Kigass Aero Components v Brown, before the position was disturbed by the Court of Appeal in the case that became Stringer. Given that the Working Time Regulations expressly preclude leave from being carried over, it seems likely that the conclusion in Kigass will now become regarded as an accurate interpretation of the law.

This is not quite the end of the matter because, in Stringer, the House of Lords ruled that a claim for holiday pay can be treated as a claim for a series of unauthorised deductions from wages. Therefore, it does not matter if unused holiday cannot be carried over from one year to the next. It will still be possible to backdate such a claim indefinitely if an employee has taken holiday but has not been paid for it. The question then arises as to what it means to have “taken holiday” in the context of an employee on sick leave and Kigass again provides the answer. An employee must give his employer notice that he wants to take leave. If he does not then no entitlement to holiday pay arises. In most claims arising at the moment, the effect of this will be that most claims cannot be backdated unless the employee has shown the forethought to give notice of his holiday in anticipation of the Stringer decision.

Famously, ‘Man Bites Dog’ is regarded as being news but ‘Dog Bites Man’ is not. Those cases in which backdated holiday pay has been awarded have received a lot of publicity but I suspect that this is because they are unusual and that, more generally, backdated holiday pay has not been awarded. However, looking forward, both employers and employees are now aware of the impact of the Stringer decision and so they should be expected to comply with the consequences of it. Employees would be advised to give notice of any period to be designated as holiday during their sick leave and employers should be aware that a few tribunals, at least, may not be too concerned about whether proper notice has been given.