3 Oct 2016
I’m an HR Manager at a Private Health Insurance company. We have recently had a request from an employee to re-arrange their annual leave after they informed us that they were at home sick during their planned holiday. Are we required to grant this request or can we simply say that although it is unfortunate they were ill we consider their annual leave as having been taken and they cannot rearrange their holiday?
Yours sincerely
Miss Fit
Dear Miss Fit,
This is a very topical query because of the recent European Court of Justice decision in the case of Pereda v Madrid Movilidad SA (Pereda). Although the position is not entirely clear in the UK (because the case considered the provisions of a European directive rather than the provisions of the UK Working Time Regulations), there is a risk that refusing an employee’s request to rearrange holiday could lead to the employee bringing a successful claim against your business.
Illness during Annual Leave
The EU Position
In Pereda the ECJ held that workers who are unwell during a period of pre-arranged statutory annual leave are required to be given the right by their employer to take that annual leave at a later date. If the worker has no opportunity to take that leave before the end of the leave year (for example, because they are unwell towards the very end of the leave year), then the worker should be able to carry over the lost annual leave into the next leave year.
The UK Position
The EU law is directly effective against public sector companies and therefore public companies will need to allow workers the opportunity to re-arrange holiday where they are taken ill during pre-arranged annual leave.
However, in the private sector, employers must rely on the Working Time Regulations (“the WT Regulations”), which are based on and implement the EU law, and it is uncertain at the moment whether the WT Regulations are capable of being interpreted as to give effect to this principle. Even if the principle were to apply to UK law further uncertainties arise;
  • Under the EU Law, Member States must ensure that every worker is entitled to at least 4 weeks’ paid annual leave whereas the WT Regulations entitle workers in the UK to 5.6 weeks (i.e. 28 days for full-time employees, which includes Bank Holidays) paid annual leave per year. It is therefore unclear whether the Pereda principle will apply to the full 5.6 weeks provided for in the UK Regulations or only 4 of those weeks.
  • The WT Regulations currently provide that full-time workers can carry over no more than 8 days of their 28 entitlement to the next holiday year. Therefore, if an employee is sick during their statutory leave and they seek to carry it over into the next holiday year, Pereda tells us that the employer ought to allow that carry-over even though it might be in breach of the WT Regulations.
What Action Employers Should Take
1) Public sector companies – The decision in Pereda will apply to public sector companies immediately and therefore these companies need to take immediate action to ensure that they have policies in place to allow workers to re-arrange pre-arranged holiday.
2) Private sector companies – Whilst the position is unclear (and will remain so until the UK Courts have ruled on the matter or the Government amends the WT Regulations), employers who refuse to allow sick workers to rearrange annual leave run the risk of potential claims from employees. A cautious approach would be to assume that the Pereda principle is applicable to UK law now, in which case private sector employers should form policies for such requests. In your particular case, subject to your sick leave policy being correctly followed, you may decide that the safest approach is to grant the employee’s request to re-arrange their holiday.
How to Prevent Abuse by Employees
There is some concern that if the right to re-arrange holiday does apply to all employers in the UK law, it is open to abuse by employees. There is the risk that an employee may go on holiday and subsequently claim that they were ill in order to obtain further paid annual leave. Below are some suggested measures that you may want to consider to prevent such possible abuses.
  • Offer only statutory sick pay to employees who take sick leave
Claiming sick leave will be less attractive to employees if they are only entitled to statutory sick pay rather than a generous contractual sick pay. However, remember that if you are planning to change the sick pay provisions of existing employees you need to consider how you go about changing those terms and conditions without triggering potential claims. For more information on changing terms and conditions of employment contracts please click on the attached link; http://www.hrlaw.co.uk/site/toptips/changing_terms_and_conditions_of_employment.html
  • Require medical evidence.
A simple measure to be taken is to ensure that you follow a strict policy when it comes to employees notifying and evidencing sick leave. Many employers only require employees to provide medical evidence after 7 days of sick leave. However, before the requirement to provide a sick note is even triggered a strict policy requiring employees to contact their line managers within a certain time frame and to keep the company updated on a daily basis can also act as an effective deterrent.
The new fit note regime may also limit the potential abuse by employees by requiring employees to return to work if the note states they are fit to work or fit for some work. 
Jane Spiers is a Trainee Solicitor in the employment law department at Fox Williams LLP.

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