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The Pereda Case
The case of Pereda v Madrid Movilidad has meant that employees who fall sick whilst on holiday can reuse their holiday at another time, and if that is at the end of a leave year this means they can carry it forward to the next leave year.
So is this a charter for employees to increase their holidays? Well this may depend on whether they will get paid for the sick leave. For employers who only pay SSP, then there may not be any incentive to declare they are sick – as at least the first three days are unpaid. Employers who pay Company Sick Pay could amend their rules to state that such absences will only be covered by the SSP scheme, or limit Company schemes to those provide a UK Doctor’s certificate. The following would be a suitable clause for the latter scenario:
Sick Absence during holiday
If you fall ill during your holiday you may request that the relevant days are treated as sick leave. In such cases the corresponding holiday days will available for your use on another occasion.
Payment for any such sickness absence will be under the Statutory Sick Pay Scheme. However, if you provide a UK Doctor’s certificate to cover the full period of sickness, payments under the Discretionary Sick Pay scheme may be made, subject to the limits of the scheme.
You may have to pay a fee for such a certificate if the absence is less than 7 days – any such fee will not be reimbursed by the company.
The Stringer Case
The Stringer case, again at the European Court of Justice, decided that employees can ask for holiday during a period sick absence and be paid for such holidays. Also, that any payment in lieu of leave upon termination of employment must include any untaken statutory annual leave even if the employee has been on sick leave for the whole of the leave year – although a recent Tribunal case may suggest a way to limit the exposure to this.
Clearly an employee on long term sick leave who has used up any Company Sick Pay, and be surviving on SSP or no pay, will be tempted to use this new ‘right’ to take their accrued holiday – and get some income. Employees on long term sick leave continue to accrue at least statutory holidays during their absence (as well as any additional contractual holidays, depending on how your contracts are drafted). Given the Pereda case means that any unused leave from one year can be carried over to the next, this could mount up to a lot of holiday.
The worry for a lot of employers is that employees, particularly those who will only get SSP payments anyway, will now seek to take holiday instead of sick leave for short absences.
However, well drafted holiday and sick pay policies can prevent such abuse, by specifying the amount of notice needed to book leave - which will stop such requests for short absences. For those on longer term sick leave, who have exhausted any Company Sick Pay, the option to take, and be paid for, holiday leave may be attractive. From a Company point of view this may ensure that when the person does return to work they do not have a whole load of holiday accumulated to take.
Whilst this may, therefore, be viewed as a ‘win win’ scenario, it will be important to ensure that where holidays are claimed during a period of sick leave, the employee is clear that the period will still count towards any sick leave limits that may trigger other processes. This would avoid someone taking a one day holiday in the belief that it may stop you from triggering a ‘long term sick absence’ process.
Khan v Martin McColl
For those dealing with a significant absence, where holiday accrual has spanned two or more leave years, this recent Tribunal case may have uncovered a way to limit payments in regard to some of the entitlements. The employer, when the employee resigned made due payments for the holiday entitlement accrued in the final holiday year – but not anything in respect of earlier years.
The employee brought claims under the Working Time Regulations 1998 and for unlawful deductions from wages for the holiday in the previous year and for holiday he had carried forward from year before that. Employees have to be denied the opportunity to take holiday for a claim to arise. The tribunal dismissed the claim, holding that he had not requested holiday, and so had not been "denied" it. It also held that the employer's payment on termination in lieu of holiday accrued during the last year of employment "broke" the series of deductions and so rendered the claims for earlier accrued but unused holiday out of time.
As a Tribunal decision it is not binding on other tribunals, so there is no guarantee that another case would be decided in the same way – particularly if there was evidence that an employee had asked to take leave and that had been refused.
Should you have a case that appears similar, please get in touch so that we can discuss the practicalities of such an approach.
To see other articles in this edition of HR Matters, please click here
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