authors
Christopher Hitchins | Partner, London
Ashley Brown | Associate, London
Lorene Caby | Paralegal, London

Annual Leave Under UK and EU Law
Article 7 of the Working Time Directive (which applies to all European Union Member States) entitles all workers to a minimum of four weeks’ paid annual leave per year. However, under the Working Time Regulations 1998 (Regulations), which incorporated the Working Time Directive (Directive) into English law, workers currently have a statutory entitlement to 5.6 weeks per year.

The European courts have recently considered the inter-relationship between the right to annual leave and sick leave in the case of Stringer v HM Revenue and Customs (Stringer) and Schultz-Hoff v Deutsche Rentenversicherung Bund (Schultz-Hoff) as previously reported in our LawFlash of 27 January 2009 as well as the July edition of International Perspectives. In the Stringer case, the European Court of Justice (ECJ) determined that, under the Directive, workers continue to accrue annual leave while on sick leave, irrespective of the length of sick leave. It also held that it is for national courts (such as the courts in the UK) to decide whether annual leave can be taken during sick leave or whether it should be taken once the worker returns to work.

Facts of the Pereda v Madrid Movilidad SA Case
In the Spanish case of Pereda v Madrid Movilidad SA, Mr. Pereda was allocated a period of four weeks’ annual leave. However, two weeks before his annual leave period commenced he suffered an accident at work. As a result, he was unfit for work for six weeks. As his period of sick leave partially overlapped with his planned holiday, Mr. Pereda asked his employer to allocate him a new period of paid annual leave, but this request was refused. Mr. Pereda subsequently brought a claim in the Spanish courts.

Ruling by European Court of Justice
The Spanish courts initially referred the claim to the ECJ for a preliminary ruling on the interpretation of Article 7 of the Directive, to establish whether it is contrary to the Directive for a worker who is on sick leave during a scheduled period of annual leave to be denied the right, following his or her recovery, to take the annual leave at another time, including, if necessary, after the end of the corresponding leave year.

In reaching its decision, the ECJ concluded that the four weeks of paid annual leave under Article 7(1) of the Directive must be regarded as a particularly important principle from which there can be no derogation.

The ECJ further explained that the purpose of entitlement to paid annual leave is to enable the worker to rest and to enjoy a period of relaxation and leisure, whereas the purpose of entitlement to sick leave is so that the worker can recover from being ill or injured.

According to this judgment, a worker who is on sick leave during a period of previously scheduled annual leave has the right to request that he or she reschedule such leave at a time that does not coincide with the period of sick leave.

This principle is likely to apply whether the employee falls sick before or during the actual period of leave.

What Is the Implication of This Judgment for Employers?
This judgment has been met with concern by employers that are worried that employees may now return from periods of annual leave in seemingly good health yet claim that they were ill during their annual leave period.

There is now a conflict between the Regulations in the UK and the judgment given by the ECJ in the Pereda case. While the Regulations do not permit annual leave to be carried forward to the next leave year, Pereda has now made it clear that statutory leave is to be allowed to be carried forward to the next leave year in certain cases if the employee has not had the opportunity to take it.

It is not clear whether this right applies to the minimum four weeks provided by EU law or whether it would extend to the full 5.6 weeks granted in the UK under the Regulations. It is likely to be the latter, but we await confirmation from the UK courts.

Public sector workers are able to benefit from the Pereda decision because of the doctrine of direct effect, which allows them to enforce EU law directly in the UK courts. It is not as easy for private sector workers, since they are unable to enforce EU rights directly in a tribunal. They will have to wait until the Regulations are amended or else ask an Employment Tribunal to interpret the Regulations so as to take account of the purpose behind the Directive (known as indirect effect).

We would urge employers to review sickness absence and holiday entitlement policies and contracts to make sure that they comply with the Regulations.