European ruling on annual leave could have wide implications for employers

The Court of Justice of the European Union (CJEU) is hearing KHS AG v Winfried Schulte, an important case about whether a worker’s annual leave entitlement can expire at the end of a holiday year or specified carry over period if it is not taken, even if that worker has been sick and therefore absent from work therefore accruing several years’ holiday entitlement. Owen Warnock, partner at international law firm Eversheds comments:

“This is an important case which will have implications for employers in the UK. To put the case in context, following the CJEU’s ruling in the linked cases of Stringer and Schultz-Hoff it became clear that paid annual leave under the Working Time Regulations (WTR) continues to accrue during sick leave, and that workers can opt to take that leave when off sick (subject to the employer’s rights to control when leave is taken). A further CJEU decision ruled that workers who go on sick leave during a period that has been scheduled as annual leave for the purposes of the Working Time Directive should be allowed to reschedule their holidays, even if that means allowing leave to be carried forward into a subsequent holiday year.

“In essence the position following those CJEU decisions is that workers who are on sick leave have a choice: they can take annual leave if they wish, but if they would prefer not to do so they can insist on postponing their annual leave and taking it at a later date, possibly even in a subsequent leave year if it is not possible to schedule leave before the current year ends.

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“This latest case asks the CJEU for further guidance – particularly on how long holiday can accrue and be carried forward. The UK Working Time Regulations need amendment to reflect the existing European case law on the topic of holiday and sickness, so it will be useful to have whatever further clarity the European Court can provide. Employers will certainly welcome if it the Court puts some limits on the ability of long term sick employees to accrue and carry forward holiday.”