ECJ's holiday sickness ruling could cost employers dear, warns expert

The ECJ, Europe's highest court, has ruled that workers whose illness occurs at the same time as holiday leave can count days as sick leave and reclaim the time as additional holiday leave. Controversially, it has also said that they do not have to take those holidays in the current employment year.

Employment law expert Nicola Johnston of Pinsent Masons, the law firm behind OUT-LAW.COM, said that this could lead to large payouts by major employers.

"You have people, particularly in the public sector, who can be out for two or three years. Now people will potentially be claiming back pay for holidays they did not get a chance to take because of the sick leave, at 30 days a year for two or three years," she said.

The ECJ ruling follows on from one earlier this year which established that people accrue entitlement to holiday days while on sick leave.

"This will be particularly a worry for large employers who are more likely to have more people out on long-term sick leave," said Johnston.

Johnston said that though the ruling made it clear that people on holiday are entitled to take some of those days as sick leave if they are ill, most employers behaved as if that were the case already.

"It has always been the case that you are either on sick leave or on annual leave, and that if you become sick while on annual leave you can ask for that not to be treated as holiday," she said. "Employers have taken a common sense approach to this, though the difficulty is always an evidential one, and I think employers are entitled to ask for some evidence of sickness."

More worrying for employers is the ECJ's insistence that employees have the right to take the displaced holiday leave in a subsequent 'reference period', or employment year.

"The employer is obliged to grant the worker a different period of annual leave proposed by him which is compatible with those interests, without excluding in advance the possibility that that period may fall outside the reference period for the annual leave in question," said the ECJ ruling.

Johnston said that this ruling directly conflicts with the EU's Working Time Regulations, which say that holidays must be taken in the year in which entitlement to them was earned.

"They can't be interpreted in line with what the ECJ has ruled, but Employment Tribunals will have to try," she said.

Johnston said that the ruling will only have a direct effect on public sector employers, but that private sector companies may treat it as if it had direct effect.

"Companies arguably don't have to do anything but that will be at the risk of someone taking a case to the Employment Tribunal and making a claim," she said. "If many of those happen, the Tribunals might stay the cases and ask the ECJ to intervene."