Sickness during annual leave - it's not as bad as it seems!

By Zoe Bedford, Employment Solicitor, Turbervilles Solicitors

July 31 2012 - In a timely case - given that the holiday season is upon us - the Court of Justice of the European Union (CJEU) in ANGED v FASGA and others has decided that workers who fall sick during their annual leave must be permitted to reschedule the time affected by illness. What does this case mean for employers faced with workers returning from their holiday, claiming they were affected by sickness, and how much impact is the case likely to have in reality?

Relaxation and leisure v recovery from an illness

In ANGED, the CJEU emphasised the distinction between paid annual leave, the purpose of which is to enable a worker to enjoy a period of 'relaxation and leisure', and sick leave, the purpose of which is to enable a worker to 'recover' from an illness which caused him to be unfit for work.

This decision extends an earlier CJEU ruling, Pereda v Madrid Movilidad SA, which related to sickness falling before rather than during a period of planned annual leave and which held the leave could be taken at another time, even if this falls after the end of the relevant leave year. It is now clear from this latest judgment that the point at which the sickness arises is irrelevant.

The ANGED decision

In ANGED, a Spanish collective agreement for department stores expressly allowed workers to reschedule a planned period of paid annual leave where that period coincided with a period of temporary incapacity to work as a result of pregnancy. Such a provision gave effect to Spanish law. However, the collective agreement did not contain a similar provision allowing workers to reschedule annual leave owing to general ill health - something not addressed in Spanish law.

Several Spanish trade unions brought a collective action in the Spanish National High Court seeking a declaration that workers covered by the collective agreement were entitled to postpone paid annual leave where it was affected by illness. The High Court upheld their claims. On appeal by the business group (ANGED), opposed to the unions, the Spanish Supreme Court referred the matter to the CJEU.

The CJEU decided that under the Working Time Directive workers were entitled to postpone paid annual leave where it was affected by illness and any national law must give effect to this right. The ANGED's appeal therefore failed.

Implementation into UK law

The Working Time Regulations, the UK law intended to implement the Working Time Directive, do not appear to allow workers to reschedule statutory holiday as required by ANGED and Pereda. Due to this conflict, the government is proposing to amend the Regulations so that they do allow this. However, Employment Tribunals are obliged to follow these European decisions and will more likely than not interpret the Regulations in line with them. For this reason, UK employers should consider ANGED and Pereda as being law they need to follow now or risk being taken to the Employment Tribunal by workers and found in breach.

Cost to employers

Going by the headlines, UK employers are greatly vexed about the adverse impact these European cases will have on their businesses at a time when they are already struggling.

The government will not have calmed their fears by officially estimating that these EU rulings will cost UK private sector employers more than £100 million a year in extra wage payments. However, given that there are about 4.5 million private sector employers in the UK, this works out at only £22.22 per private employer, which does not seem so bad.

It is also important to remember that these EU rulings only apply to the four weeks' annual paid leave required by the Directive and not to the additional 1.6 weeks' paid leave which is purely a UK right.

Moreover, about 45% of the UK workforce is entitled to nothing more than statutory sick pay (SSP). It will make little sense for these workers to turn paid holiday into sick leave when for the first three days nothing at all will be paid and, after that, only SSP will be payable.

Even where employers offer company sick pay, over and above SSP, this is often discretionary rather than contractual. So it's really only when contractual sick pay is available that employers will need to be on their guard against workers abusing these new rules.

Safeguards from abuse

There is no reason why employers should not anticipate problems by tightening up their sickness certification procedures. Most employers do not expect their staff to produce a medical certificate if they are off work for less than a week. However, there is no reason why employers cannot require their workers to provide a medical certificate at their own expense covering each day of pre-booked holiday in respect of which they subsequently claim contractual sick pay. This obligation - alongside more generous new provisions on how sickness on holiday will be treated - should be set out in an updated sickness procedure and communicated to staff so they know exactly what will be expected of them if they fall sick whilst on holiday. This procedure will normally be contractual in nature and employers will therefore have to secure their employees' agreement to the changes.

In addition, sickness absence rates during annual leave should be closely monitored for abuse, particularly with those employees whose absence rates are already a concern. Closer management will likely be needed of such individuals, such as return to work interviews. The sickness procedure should of course make it clear that any abuse could lead to disciplinary action.

A final point is that sick pay is only payable when a worker is medically unfit to do his job. A worker who cannot, for example, fly or go swimming because of a minor ear infection, may still be fit to do his job and won't therefore be entitled to sick pay.

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