Topic of the week: Sickness absence, holiday pay and Stringer

In this week's topic of the week article, Maria Hoeritzauer of Osborne Clarke looks at the impact of Stringer on sickness absence and holiday pay. 

The European Court of Justice (ECJ) confirmed that the right to paid holiday under the Working Time Directive (2003/88/EC) continues to accrue during sickness absence, and workers who have been unable to take holiday due to sickness are entitled to a payment in lieu of untaken leave, if their contract is terminated. 

• Topic of the week: Sickness absence, holiday pay and Stringer The House of Lords decision in Stringer that unpaid annual leave may be claimed as an unlawful deduction from wages means that workers can bring claims for unpaid holiday pay that has accrued over a period. 

More from HR & Compliance Centre on sickness absence and holiday pay and related topics

HR & Compliance Centre subscribers have access to a wealth of material on sickness absence and holiday pay and related topics - ranging from FAQs on holiday entitlement to policies and documents on managing long-term sickness absence. We pick out just some of the information available on the subject. 

The Stringer case

Stringer concerns the issue of employees who are unable to take their holiday entitlement due to long-term sickness. The ECJ judgment in Stringer and others v HM Revenue and Customs sub nom Commissioners of Inland Revenue v Ainsworth and others; Schultz-Hoff v Deutsche Rentenversicherung Bund [2009] IRLR 214 ECJ that the right to paid annual leave continues to accrue during sick leave and, on termination of the employment relationship, a worker who has been on sick leave and unable to take paid annual leave is entitled to a payment in lieu, has been reported by HR & Compliance Centre in the HR & Compliance Centre case reports section. For a detailed examination of the ECJ judgment see Working time: Relationship between annual leave entitlement and sickness absence from IRS Employment Review. 

The ECJ returned the case to the House of Lords for it to interpret the Working Time Regulations 1998 (SI 1998/1833) in the light of its ruling. See HR & Compliance Centre's Case reports stop press for a summary of the House of Lords final judgment in the case. 

Holiday entitlement

The Working Time Regulations determine the statutory entitlement to paid holiday. See the Holiday and holiday pay section of the HR & Compliance Centre employment law manual and How to manage workers' statutory entitlement to paid holiday for details of statutory holiday rights. 

As a result of the House of Lords decision in Stringer that employees can bring claims for unpaid annual leave as unlawful deductions claims (with the result that liabilities may mount up over a period) employers may need to review their annual leave policies and procedures, to try to ensure that employees take paid holiday during the relevant leave year. There are a number of model policies and documents on Holiday and holiday pay to help employers manage annual leave. For example:

• Holiday policy
• Contract clause on holiday entitlement and Working Time Regulations 1998
• Holiday approval and carry over contract clause

FAQs on Holiday and holiday pay answer questions such as:

• Can unused statutory annual holiday be carried forward to the next holiday year?
• Can unused statutory annual holiday be replaced by a payment in lieu?
• Can an employer require its employees to take holiday at a particular time?

Sickness absence

It is now established that annual leave accrues during sickness absence and employees can claim unpaid annual leave that accrues over a period. Therefore it is in an employer's interest to manage sickness absence to avoid a build-up of outstanding annual leave. There are a number of resources on HR & Compliance Centre to help employers manage sickness absence, including:

• Good practice: Sickness absence management
• How to deal with employees on long-term sickness absence
• Line manager briefing on long-term sickness absence

as well as a range of policies and documents on Sickness and sick pay:

• Long-term sickness absence policy
• Letter to a doctor requesting a medical report on an employee on long-term sickness absence
• Letter informing an employee absent from work due to sickness that his or her pay will be stopped or reduced
• Medical examinations contract clause
• Letter requesting that an employee attend a medical examination

See also Weekly dilemma: Health insurance, holiday accrual and sick leave from Personnel Today, in which Jennifer Currie, senior solicitor at McGrigors, looks at the effect that holiday accrual during sickness absence can have on permanent health insurance. Managing long-term sickness absence: the 2009 IRS survey from IRS Employment Review includes feedback from more than 170 employers about the ways in which they manage long-term sickness absences, the measures they have found prove most effective and the impact on their organisations of such extended periods of sick leave. 

Holidays and sickness

There are a number of resources on HR & Compliance Centre to help employers deal with the problem of employees who go off sick before and during their holiday. For example:

• Policy and procedure on sickness occurring during or just before a period of holiday
• Contract clause on employees falling sick during holiday
• How to deal effectively with sickness that occurs during or just before a period of holiday