ECJ confirms limits on holiday carry over due to sickness

A recent ruling by the European Court of Justice (ECJ) has confirmed that Member States do not need to allow untaken holidays in excess of four weeks to be carried over into the next leave year, when the reason for this is due to extended sick leave. This decision, which relates to a pair of cases from Finland, reaffirms that the current case law approach used when it comes to holiday carry over and sickness is correct.

The EU Working Time Directive, from which the UK’s Working Time Regulations 1998 (WTR) were drawn, requires all Members States to provide staff with a minimum of 4 weeks’ paid holiday per leave year. Whilst this is a minimum, Member States are free to offer more and the UK specifically requires employers to provide staff with a minimum of 5.6 weeks per leave year under the WTR.

Although employers are generally free to adopt a ‘use it our lose it’ approach to holiday entitlement as the end of the leave year approaches, previous understanding had been that exceptions had to be made for individuals who were unable to take their full leave entitlement during the leave year due to sickness absence. Instead, these individuals were able to carry up to 4 of their 5.6 week minimum entitlement over into the next leave year.

The ECJ saw fit to confirm that this approach was correct, insisting that national laws could only stop workers from carrying over any leave above the 4 week minimum, and that it was left to Member States to decide the conditions for granting or extinguishing additional holiday entitlement.

As such, employers ought to review any requests for holiday carry over carefully, regardless of whether they have a ‘use it or lose it’ approach, as they may need to make accommodations for staff who have spent a significant amount of time on sick leave.

It is worth noting that this ruling does not affect the ability of employees on maternity leave to carry over the full amount of holiday entitlement into the next leave year. Employees will continue to accrue annual leave during maternity leave and previous case law has indicated that it may be sex discrimination to refuse an employee the ability to take their accrued holiday at a later date. Therefore, to avoid costly discrimination claims, employers will be best off allowing women to carry over any annual leave they have accrued during maternity leave into the next leave year.

Ultimately, this case confirms that employers are permitted to limit the carry over of annual leave for an employee on sick leave to 4 weeks; there is no need to allow carry over of the full amount. Therefore, to avoid any disruption it will be wise to outline employees’ rights clearly in any annual leave policy, explaining the legal exceptions for staff on sick or maternity leave.

Suggested Resources