Landmark Cases: Annual Leave and Sick Leave - ANGED -v- FASGA and Others

Peninsula Team

June 25 2012

Last week on 21 June 2012 the European Court of Justice (ECJ) published a decision in the case of Asociación Nacional de Grandes Empresas de Distribución (ANGED) -v- Federación de Asociaciones Sindicales (FASGA) and Others [C-78/11] where they stated that ‘a worker who becomes unfit for work during a period of paid annual leave is entitled subsequently to the paid annual leave which coincided with the period of unfitness for work’. In effect, what this means is that a worker who becomes unfit for work before or during their paid annual leave is entitled at a later point in time to a period of leave of the same duration as that of his sick leave.

Background In Ireland it had already been accepted that an employee could retake annual leave if they fell sick during annual leave and could provide the appropriate medical certification. The issue of the employee falling sick before the leave, however, had not been considered previously so this case is worth taking note of. In Ireland, employees do not have any general entitlement to pay from their employers while they are on sick leave. On this basis, employers do not have to provide sick pay to their employees and it is up to each individual employer to draw up their own Company sick pay policy. However, this position becomes complicated when annual leave and sick leave overlap. Indeed, that was the case in ANGED –v- FASGA where a number of trade unions representing workers brought collective actions before the Spanish courts for recognition of the right of workers to paid annual leave, even where such leave coincides with periods of sick leave. The employers, however, argued that workers affected by sickness before starting a period of annual leave, or who fall sick during annual leave – are not entitled to take the annual leave at a later date. Unlike Ireland, Spanish law was silent on the issue and so the matter was referred to the European Court of Justice.  Summary Throughout its decision, the ECJ noted that it had been well established that an employee’s entitlement to paid annual leave must be regarded as a particularly important principle of EU social law, a principle expressly enshrined in the EU Charter of Fundamental Rights. Accordingly it was stated that the right to paid annual leave cannot be interpreted restrictively. The ECJ went on to state that The Court also points out that the purpose of the entitlement to paid annual leave is to enable the worker to rest and enjoy a period of relaxation and leisure. On the other hand it was noted that the purpose of the entitlement to sick leave is different, since it enables a worker to recover from an illness that has caused him to be unfit for work. On this basis it was determined that a worker is entitled to take paid annual leave which coincides with a period of sick leave at a later point in time, irrespective of the point at which the incapacity for work arose. the Court also points out that the new period of annual leave may be scheduled if necessary outside the corresponding reference period for annual leave, this being a carry over to the following annual leave year. The ECJ stated that it would be arbitrary and contrary to the purpose of entitlement to paid annual leave to grant workers the right to paid leave only if they are already unfit for work when the period of paid annual leave commences. As this decision closely reflects Irish rules employers should be aware that this decision will be applied in Ireland. Impact It is important to remember that under current Irish legislation, time spent on sick leave does not count as time worked an employee does not accrue annual leave during a period of sickness absence. However, there have also been some recent developments on this issue in the European Court of Justice. In the ECJ case of Stringer and Others v H.M. Revenue & Customs [C-520/06] and Schultz-Hoff [C-350/06] it was determined that ‘the right to paid annual leave is not to be extinguished at the end of the leave year and/or of a carry-over period laid down by national law where the worker has been on sick leave for the whole or part of the leave year and where his incapacity to work has persisted until the end of his employment relationship, this being the reason why he could not exercise his right to paid annual leave.’ In light of this, the ECJ has taken the stance that a worker’s annual leave entitlement must continue to accrue during sick leave and that an employer cannot place any restrictions on this by requiring the employee to physically work. Interestingly, this decision directly contradicts Irish rules as the Organisation of Working Time Act 1997 (OWTA) exhaustively lists those times where an employee accrues annual leave and sick leave is not one of them. As a result, it is unclear how far this decision may impact Irish private sector employers as Irish tribunals are obliged to apply the OWTA rules. As such, Irish private sector employers can likely argue that employees do not accrue annual leave while out sick, notwithstanding the decision of the ECJ. Importantly, however, if an Irish law directly contradicts a European Union rule then Ireland will be obliged to revise our legislation. As a result Irish employers should anticipate that in future definitive changes may be made whereby employees will most certainly be entitled to accrue annual leave while out sick. In conclusion, it is important for employers to be aware that annual leave and sick leave are not interchangeable. Employers should look to proactively manage employee sickness absenteeism and ensure that proper medical certification is submitted. Indeed, in future it is possible that employees will continue to accrue annual leave so an employee’s sickness absence will hit employers in the pocket. Added to this is the likely introduction of paid sick leave as Minister Joan Burton considers the introduction of a system whereby an employer will be required to account for their employee’s sickness benefit for the first 4-6 weeks. If this is introduced it is hoped that the Minister will also require an employee to attend a general practitioner of their employer’s choice as this will reduce any abuse of the system, thereby minimising any potential employer losses.

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