The European Court of Justice has handed down its decision in the important case of Stringer v HM Revenue and Customs on whether workers on long-term sick leave are entitled to accrue paid annual leave during that period. The claimants, who had been absent from work on long-term sick leave and had exhausted their entitlement to contractual and statutory sick pay, successfully argued before both an employment tribunal and the Emplyment Appeals Tribunal that they were entitled to paid annual leave under the Working Time Regulations 1998 , which implement the Working Time Directive in UK law. However, the Court of Appeal allowed an appeal by the Inland Revenue and the employees appealed to the House of Lords, which referred the case to the ECJ.

The ECJ heard the case together with that of Schultz-Hoff v Deutsche Rentenversicherung Bund, dealing with the similar issue of whether holiday that has not been taken because of sickness absence can be carried forward into the next holiday year, or beyond any carry-over period. Under German law, the right to holiday pay is extinguished at the end of the holiday year or at the end of a carry-over period of three months.

The ECJ concluded that workers’ entitlement to annual leave continues to accrue during their sickness absence and those whose employment ends before they have been able to take their full entitlement are entitled to payment in lieu. Although not explicitly stated in the judgment, it seems that workers returning from a period of sickness absence in a new holiday year would be entitled to take holiday that accrued during that sick leave.

The case will return to the House of Lords, which will give a ruling in the light of the ECJ’s judgment, no doubt overturning the decision of the Court of Appeal.

Simon Thomas, partner specialising in Employment Law comments "There has been a great deal of uncertainty over this for a number of years and a large number of Employment Tribunal claims were "stayed" pending the outcome of the decisions of the House of Lords and ECJ. Finally these will be now resolved. It also places an unwelcome burden on employers who are finding the economic climate very difficult at present."