The question as to whether employees who are off work due to sickness for more than a year are entitled to paid statutory holiday under the Working Time Regulations 1998 (WTR) was dealt with in the case of Stringer and others v HM Revenue and Customs. The matter was referred to the European Court of Justice, which ruled that, under the EC Working Time Directive, employees who have been on sick leave for a long period should be allowed to take accrued holiday on their return to work or be paid in lieu at their normal rate of pay if the employment relationship ends without them returning to work.
Whilst this decision made it clear that the WTR do not properly implement the Directive into UK law, the House of Lords ruled that holiday pay counts as wages and, where it has not been paid, a claim can be brought under Section 23 of the Employment Rights Act 1996 (ERA) for an unlawful deduction from wages. Under the WTR, there is normally a three-month time limit for bringing a claim. Where a claim is brought under the ERA, however, if it can be shown that there has been a series of unlawful deductions then, provided the claim is brought within three months of the last deduction, there is no time limit on how far back the claim can go.
The decision of the House of Lords has opened the way for backdated claims by employees on sick leave who have been denied their entitlement to paid holiday. Several cases had already been stayed pending this ruling and one such (Rawlings v The Direct Garage Door Company Ltd.) has now been heard.
Mr Rawlings was on long-term sick leave throughout 2004 and 2005 and until April 2006, when he terminated his employment. His employer had paid him four weeks' holiday pay in relation to the year 2004, after he gave notice in early December that he intended to exercise his right to paid holiday under the WTR and specified his holiday dates as being from 2 to 30 December. However, his employer refused to pay him any holiday pay for 2005 and 2006. Mr Rawlings brought a complaint of an unauthorised deduction from wages under the ERA.
The Employment Tribunal ruled that Mr Rawlings was entitled to four weeks' pay for 2005 and a proportion of four weeks' pay for 2006. His employer was therefore ordered to pay the sum of £1,554.92 as an unauthorised deduction from his wages.
The effective management of sickness absence is important, particularly in the current economic climate. It is a complex area of employment law and the cost of getting it wrong can be high. We can advise you on your individual circumstances to ensure you avoid the potential pitfalls.
Contact Susan Kelly for advice on this or any employment law matter.