Sick Workers Cannot Carry Over Holiday Indefinitely

A 15 month limit on the right for sick workers to carry over untaken holiday did not breach European law, the ECJ has ruled.  The right to carry over untaken holiday is not without limits as unlimited carry over defeats the EC Directive’s purpose of providing a rest from work.  

In KHS AG v Schulte the ECJ has ruled that sick workers who have not taken their statutory holiday cannot carry it over indefinitely.  Any carry over period permitted by national laws should be substantially longer than a year, but must protect employers from organisational problems caused by long periods of absence.

Mr Schulte was off work sick between January 2002 and August 2008 when his employment was terminated.   Under the terms of an industry collective agreement, holiday untaken because of sickness could be carried over for 15 months.  Mr Schulte claimed pay in lieu of untaken holiday for the 2006 to 2008 holiday year.  His employer argued that the 2006 entitlement had lapsed and the German court asked the ECJ whether the relevant provision of the collective agreement was compatible with the holiday provisions of the Working Time Directive.

The ECJ held that a 15 month carry over period is compatible.  Statutory holiday is provided to enable a worker to have a rest from work and to enjoy a period of relaxation and leisure.  After a certain point, holiday no longer provides a rest from work and instead becomes purely a period of relaxation and leisure and does not meet the Directive’s purpose.  It gave guidance on the length of the carry over period, saying that it should:

• Be substantially longer than the reference period in respect of which it is granted (the reference period is normally a year);
• Ensure that the worker can have rest periods that may be staggered, planned in advance and available in the longer term; and
• Protect the employer from the risk of a worker accumulating periods of absence of too great a length and from difficulties long periods of absence will cause.

Employers will be relieved that the ECJ has put a limit on the right of sick workers to carry over untaken statutory holiday.  The Working Time Regulations will need to be amended as they do not currently permit carry over - the Government has already indicated in its Consultation on Modern Workplaces that it will be making amendments.  It remains to be seen what carry over period the Government will plump for.  Although the ECJ in this case upheld a 15 month carry over period, the International Labour Organisation Convention on Annual Holidays with Pay allows 18 months and this may prove a safer course for the Government to take.