One of the main distinctions between contractual holidays and statutory holidays was the fact that you have to be in work to accrue the statutory holidays. In the famous words of the Court of Appeal in Ainsworth -v- HMRC, you have to be working to take a break.
This decision had the potential to save employers several millions. In our June issue of Smart News we reviewed this decision and advised that the matter was on appeal to the House of Lord, who referred it to the ECJ for their opinion. Unfortunately for employers, the ECJ opined that:
- a worker who is on sick-leave for the whole of an annual leave year is entitled to a period of four weeks’ paid annual leave (now 24 days in the UK), despite the fact they are not actually at work. The national courts can decide whether the paid leave can be taken during that year, or whether it should be carried over to another year, but either way the employee is entitled to be paid at some point.
- the right to paid annual leave is not extinguished at the end of a leave year if the worker was on sick leave for the whole of that year, or if he was absent on sick leave for part of the year and was still on sick-leave when his employment terminates.
The House of Lords will now give a final judgment, and (in the light of the ECJ opinion) will no doubt overturn the Court of Appeal’s decision.
Editor’s Note: In the light of this decision, we believe that there is still some merit in the advice that employers should still separate the two types of holiday, where the employer offers more than the statutory minimum holidays.
This is because employers and employees have some flexibility over contractual holidays which are not available in relation to statutory holiday. The contractual portion of the holiday can be bought out if the employer needs the labour to meet increase demands or used as part of a salary sacrifice scheme, if the employer needs the workforce to take more holidays when demand is low. Statutory holidays by contrast cannot the traded.
Stringer -v- HMRC