The question
I was looking through our sickness policy the other day and saw it stated that "when sickness absence is over four weeks, holiday pay will cease to accrue".
Further along, it also said that "if you fall sick during a time that has been booked for holiday, you will not be able to take this as sick pay".
After the rulings last year (Stringer and Pereda), I suspect that both of these statements need to be adjusted. However, what I am not clear on is how this works when the company already pays more than the law requires?
I am also a little unsure as to whether the ruling refers to the statutory allowance or the contractual allowance? Given that the company offers full pay for the first four weeks of absence and half-pay for the next six weeks, does it apply only to the statutory entitlement? Or does it apply to all forms of sick pay?
If it applies only to statutory pay, could the company argue that it only needs to top-up the pay of someone covered by these rulings to the amount that would have been covered by statutory sick pay?
Or is the ruling intended to ensure that people all get the same treatment regardless of illness, which would mean that it covers the full amount of contractual sick pay? Please note that I am not thinking about what constitutes good practice here, but about what the company is obliged to do.
The legal verdict
Andrew Crudge, a solicitor at Thomas Eggar
The two sentences that you have taken from the sickness policy cover two different points (one concerning holiday pay, and the other concerning sick pay) and so it is important to consider them separately.
The first sentence states: “When sickness absence is over four weeks, holiday pay will cease to accrue”. So this point relates to the accrual of holiday pay during sickness absence. The Stringer case that you refer to specified that workers on long-term sick leave are entitled to take – and be paid for – holiday.
Therefore, such a sentence in a policy that is attempting to prevent holiday accruing during long-term sickness would not be enforceable and so should be removed altogether.
The legal position relating to the other sentence is slightly more complicated. The policy states: “If you fall sick during a time that has been booked for holiday, you will not be able to take this as sick pay”.
But a central principle that was established in the Pereda case that you refer to is that employees who fall sick before or during holiday absence should be allowed to reschedule that holiday for a later date.
Therefore, it is clear that, if an employee falls sick during their holiday, it would constitute a sickness absence rather than a holiday, and so to deny them all forms of sick pay during this period would be unlawful.
However, your query is about whether the ruling would apply just to statutory sick pay or to additional company sick pay as well. Because company sick pay is in excess of SSP, you could arguably specify that if employees fall sick during their holiday period, they will only be entitled to SSP and not company sick pay.
But there is a risk that a staff member could argue that such an approach amounted to a detriment for them and their rights under the Working Time Regulations and is, therefore, unlawful.
So a less risky approach – which may still enable you to limit company sick pay in the case of sickness during holiday – would be to require employees in this situation to provide medical evidence in order to be entitled to company sick pay.
This request is likely to prevent staff members from falsely claiming that they were sick while on holiday, but it would be necessary to ensure that you had a contractual right to require such evidence.
Andrew Crudge is a solictor at Thomas Eggar.
David Ludlow, head of employment law at Barlow Robbins
Your suspicion is well-founded. Both of the statements in the sickness policy need to be adjusted to accurately reflect the law, which is that:
- Statutory holiday entitlement and the entitlement to statutory holiday pay continue to accrue during a period of sickness absence; and
- If a worker falls sick during a time that has been booked as holiday, s/he will be able to take them as sickness absence days and may, depending on their contractual terms and length of the absence, be entitled to statutory or contractual sick pay.
The rulings to which you refer relate to the statutory allowances for paid leave only, however.
If the contract provides that any holiday over and above the statutory entitlement does not accrue during a period of sickness absence, that is the correct enforceable legal position in relation to that additional contractual entitlement.
Similarly, it is only the statutory minimum of holidays that can be converted into sickness absence days. The fact that the company offers full pay for the first four weeks of absence and half-pay for the next six weeks has no bearing.
The only question is whether the worker is converting days that were booked as holiday to sickness absence days (Pereda): it is the number and nature of these days that are the determining factors as to whether any and, if so, what type of pay is payable.
However, there remain two undecided questions about holiday pay in UK law. The first is whether the additional 1.6 weeks of statutory holiday that UK workers enjoy over and above the minimum four weeks required by the EU Working Time Directive can be carried over to the next holiday year in the absence of a specific agreement to that effect.
The second is for how long accrued but untaken leave can be carried forward. European cases suggest that it is between 15 and 18 months, but the UK government is currently consulting over the matter, with a view to amending the UK Working Time Regulations.
David Ludlow is head of employment law at law firm, Barlow Robbins LLP.
