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UK law correct to limit annual leave carry-over due to sickness

VWV

Advocate General Bot of the European Court of Justice (ECJ) has given an opinion that Member States are permitted to limit the carry-over of annual leave accrued during periods of long term sickness to the four weeks of annual leave specified under the Working Time Directive.

Background

Under the EU's Working Time Directive (Directive), workers are entitled to four weeks of paid annual leave, which must be taken in the leave year for which it is granted.

ECJ case law has established that paid annual leave can be carried over into the subsequent leave year if the employee was unable to take the leave due to sickness.

Under domestic laws member states may grant workers more than four weeks paid leave.

For example, under UK law, workers are entitled to a total of 5.6 weeks of annual leave per year under the Working Time Regulations (Regulations).

In two Finnish cases it was argued that the ability to carry over annual leave in cases of sickness, as established by ECJ case law, should also apply to this additional holiday entitlement under domestic law as well as the four weeks required by the Directive.

The parties in the Finnish cases argue that the EU Charter of Fundamental Rights (Charter), which grants workers the right to annual paid leave, should be read with the ECJ case law to mean that the rules on carry-over apply to the entirety of a worker's annual leave entitlement.

The Advocate General's Opinion

The Advocate General explained that while the fundamental right to a period of paid annual leave is enshrined in the Charter, the scope of that right is specified by the Directive.

Domestic law which extends the provisions of the Directive should be considered an implementation of the Directive, and therefore subject to the Charter.

Therefore, his opinion was that the Charter is applicable to situations in which enhanced national measures relating to paid annual leave are at issue.

However, while this ensures that national measures which undermine the fundamental rights enshrined in the Charter can be challenged by the ECJ, national measures may of course provide for more favourable provisions like in the UK where we are entitled to 1.6 weeks more leave than that specified by the Directive.

The ECJ case law specifically relates to the minimum annual leave entitlement conferred by the Directive.

National law or collective agreements may therefore determine what happens in relation to any additional paid annual leave as they see fit, as long as those provisions do not in any way undermine the workers' rights in respect of the four weeks of paid annual leave under EU law.

The Advocate General's opinion reinforces the decision made in Sood Enterprises Ltd v Healy, which established as a matter of UK case law that the additional 1.6 weeks of holiday provided for by Regulations do not carry over where the worker couldn't take that leave due to sickness.

The regulations specifically exclude carry over and this is only inconsistent with the ECJ position in so far as it relates to the four week minimum entitlement specified by the Directive.

The additional 1.6 weeks therefore remains subject to the bar on carry over set out in the regulations.

Best Practice

If the ECJ agrees with the Advocate General's opinion, this will confirm that Member States are allowed to limit the carry-over of annual leave in cases of sickness to the 4 weeks annual leave entitlement under EU law, and so will confirm that the current UK position is correct.

In the UK this means that employers must allow 4 weeks (equivalent to 20 days for full-time workers) of a worker's annual leave to be carried over to the subsequent leave year if the worker is unable to take the leave because of sickness.

However employers are not obliged to allow workers to carry over the additional 1.6 weeks (equivalent to 8 days for full-time workers) granted by UK law.

When drafting contracts of employment, employers may want to specify that any leave taken during the holiday year will first satisfy the requirements under the Directive before any additional statutory or contractual entitlement.

For more information please contact Kathy Halliday in our Employment Law team on 0121 227 3711.