Recently, the advocate-general (a legal officer who offers advice to the Judges in the European Court of Justice) gave his long awaited opinion on the case of Inland Revenue v Ainsworth and others. This could mean that employers have to give holiday rights to staff on long-term sick leave.

Michael Ball, employment partner, law firm Halliwells

Background to the case 

• In the case of Inland Revenue v Ainsworth and others, a group of four employees claimed that they had the right to paid holidays while on sick leave under the Working Time Regulations 1998. One of the employees, Mrs Khan was on indefinite sick leave and asked for 20 days paid holiday during this time. The other three employees, Mr Ainsworth, Mrs Kilic and Mr Thwaites were dismissed while on long-term sick leave and asked for compensation in place of holiday which they hadn’t taken. 

• Back in 2005 this case made headlines when the Court of Appeal controversially held that the right to accrue paid holidays under the Working Time Regulations 1998 was at least in part conditional upon a worker being ‘in work’ and not absent due to sickness.

• The Court of Appeal held that Khan could not take statutory annual leave during a period in which she was on sick leave. The Court stated in the cases of Ainsworth, Kilic and Thwaites employees who had been absent due to sickness for the whole of the current leave year were not entitled to compensation on termination of employment. In reaching this conclusion the Court made it clear that the principle of ‘leave entitlement’ had to mean that there was something to have leave from.

• At the appeal, the House of Lords decided that the case raised the issue of how to interpret the European Working Time Directive.

• It was decided to refer these issues to the European Court of Justice (ECJ), under the changed case reference of Stringer v HMRC.

The advocate-general’s opinion

• The advocate-general stated that the right to paid annual leave does not depend on a worker's fitness for work. Therefore an employee on sick leave continues to accrue a right to annual leave under the Working Time Directive. Employees are entitled to take the leave when they return to work but may not take the leave during a period in which they are on sick leave.

• In relation to a payment on termination, the advocate-general said that an employee is entitled to a compensatory payment as a replacement for leave that has been acquired but not taken due to illness.

Implications

• It's likely that this opinion will be confirmed in the ECJ’s final decision, which is expected later this year (2008). The case will then return to the House of Lords for judgement.

• If the ECJ decides that employees are entitled to accrue paid holiday while on sick leave there is a risk that employers may terminate contracts of employees who are absent due to illness earlier than they would have done normally.