Public and Commercial Services Union

PCS has south advice from our solicitors following the successful European Court of Justice (ECJ) ruling on the PCS-backed Stringer case.

Negotiations are due to commence with the employer shortly in order to attempt to adapt internal policy, however, as can be seen, the legal process grinds slowly on and may cause delays to internal improvements.

In the meantime, reps should look to lodge internal grievances in the usual manner and subsequently Employment Tribunal (ET) claims no sooner than 28 days after the internal submission. These should be accompanied with a request to stay proceedings as appropriate – in line with the attached overview.

Sick leave, annual leave and the working time directive

The European Court of Justice delivered its judgment on 20 January 2009, in Stringer, Ainsworth and others v Commissioners of Inland Revenue, Case No. C-350/06. This followed the referral of questions to the ECJ from the House of Lords. The workers in the case were members of the PCS whose claim was supported by the union. Chris Jeans Q.C and Michael Ford were instructed by Thompsons.

The case concerned how the right to paid annual leave under the Working Time Directive, 2003/88, implemented in the UK by the Working Time Regulations 1998, operates in the circumstances in which workers are on long-term sick leave. The Court was asked to decide two questions. The first was whether a worker on indefinite sick leave could exercise the right to take annual leave. The second was whether a worker who had been sick for all of a leave year was entitled to a payment in lieu for untaken annual leave on termination of employment.

Holding that the right to annual leave is a fundamental social right, on the first question the Court ruled that, under the Directive, national law could either permit a worker to take leave while he or she was off sick or could deny the entitlement to take leave while off sick. But it added – and this is the critical point - that if national law prevented a worker off sick from taking annual leave, the worker must have the opportunity to take that leave at another time (paragraph 29). Currently, under UK law there is no right to carry over annual leave to the following year (see regulation 13(9)), so that a worker off sick who is not allowed to take leave in a particular leave year will simply lose the right at the end of the leave year. This means that, in order to comply with the Directive, employees on indefinite sick leave must be allowed to take annual leave while they are sick; otherwise the worker will never have the opportunity to exercise the right at all. Alternatively the government will need to amend the Regulations to permit the carrying over of annual leave for those employees who cannot take it because of sickness.

On the second question, concerning the right to a payment on termination, the Court said that the right to annual leave is not lost because a worker happens to be sick for the whole of the leave year prior to termination and so has not been able to exercise the right to annual leave. It follows that an allowance in lieu, based on normal wages, must be paid to such a worker on termination of employment. Employers must, therefore, pay the allowance in lieu under regulation 14 of the Working Time Regulations to workers off sick for the whole of the leave year, and must ignore sickness absence in the calculation of the sum due. The ruling of the European Court effectively overturns the decision of the Court of Appeal in the proceedings.

The case will return to the House of Lords probably later this year, both to consider the effect of the judgment of the European Court of Justice and to decide whether a complaint about unpaid annual leave can be brought as a claim for deduction from wages.

Effect of ECJ decision on cases which are currently stayed

There are large numbers of cases in the Employment Tribunals which are currently stayed pending the outcome of the case in both the House of Lords and ECJ. These cases fall into two categories:

1. Brought under the Working Time Regulations for holiday pay during sickness;
    
2. Claims also brought under the Employment Rights Act 1996 unauthorised deductions provisions for holiday pay denied over one or more years.

The first category of cases should be resolved by the decision of the ECJ. The second category (“The List Design” cases) are not resolved by the decision of the ECJ in Stringer. How a worker is able to claim his/her holiday pay is a matter for national law. Following Ainsworth v HMRC in the Court of Appeal, our law is that the only way of bringing a claim for unpaid working time holiday is by making an application to the ECJ in accordance with Regulation 30. This also means that a claim has to be brought either during the leave year in question (or within three months of the end of the leave year) or within three months of termination of employment. In any event a worker can only claim one year’s worth of working time holiday s/he cannot claim for any previous years leave which was outstanding.

If you are representing members with cases which are currently stayed pending Stringer/Ainsworth v HMRC you may be contacted by Employment Tribunals asking about progress and whether you have any suggestions for any steps that should be taken. You should respond by advising the Employment Tribunal that the cases should remain stayed pending final determination by the House of Lords.

If you need further advice you should use the usual PCS channels to obtain legal advice.

Thompsons Solicitors
17 March 2009