Sun, sea, sicknotes

The Working Time Directive provides that every worker is entitled to paid annual leave of at least four weeks. Payment in lieu of this minimum entitlement is prohibited by the Directive, except on termination of employment. The Working Time Regulations 1998 ('WTR'), which implement the Directive into national legislation, are more generous. They provide that workers are entitled to 5.6 weeks' annual leave. For a full-time worker who works from Monday to Friday inclusive, this equates to 28 days' holidays per annum. The WTR also provide that workers are entitled to be paid a week's pay for each week of leave. Finally, the WTR provide that statutory minimum leave must not be replaced by a payment, except upon termination of the employment relationship. Of course, it is also open to employers to give their employees an enhanced entitlement to holidays, for example by providing for five weeks' holiday plus bank and public holidays. For a long time now, the UK courts have been grappling with the tricky question of in what circumstances workers who are on long-term sick leave are entitled to paid holiday pay under the WTR. The issue arose in 2002, with the case of Kigass Aero Components v Brown. It is important to note that this case concerned minimum statutory holiday entitlement under the WTR. In this case, the Employment Appeal Tribunal (EAT) held that statutory holiday continues to accrue during periods of sick leave and that a worker on long-term sick leave could designate four weeks (the entitlement under the WTR at the time) in any leave year as statutory annual leave. The worker would be entitled to be paid for such annual leave, even if they had run out of statutory and contractual sick pay. The Kigass ruling was overturned in 2005 by the Court of Appeal in Commissioners of Inland Revenue v Ainsworth and others. The Court of Appeal's rationale was: a worker cannot take statutory holiday while absent on sick leave and consequently is not under an obligation to work; and a worker who has been on long-term sick leave and unable to work at all in a particular leave year has no right to paid statutory holiday for that year and no right to a payment in lieu on termination of employment. The Ainsworth case was appealed to the House of Lords (the case became known as Stringer at this point). The House of Lords in turn referred some specific questions to the European Court of Justice (ECJ) about the relationship between sick leave and statutory annual leave. These were finally answered in January 2009, and the case was recently returned to the House of Lords to be determined. As well as the questions identified above, a separate issue was also at the heart of this case, namely whether a claim for statutory holiday pay could be brought under the 'deduction from wages' provisions of the Employment Rights Act 1996 (the ERA) as well as under the WTR. This might sound like a technical distinction, but is in fact important from the point of view of time limits. The limitation period for bringing a claim is more favourable to workers under the ERA. Claims under the WTR must be brought within three months of the date on which the exercise of the right should have been permitted or payment should have been made. By contrast, a wages claim under the ERA can be brought within three months of the last in a series of deductions, which may have taken place over several years. The effect of an unlawful deductions claim, therefore, is that unpaid holiday pay from previous years can potentially be claimed. Furthermore, employees can claim for consequential loss that they have suffered if they bring an unlawful deductions claim under the ERA. The Court of Appeal had overruled the judgments of the lower courts and held that such claims can only be brought under the WTR, not under the ERA, but this point was also appealed to the House of Lords in the Stringer litigation.