In 2009, there were a number of important developments in the law relating to holidays and sickness absence namely, the decisions in “Stringer & Others v HM Revenue & Customs”; “Schultz-Hoff v Deutsche Rentenversichering Bund” and “Pereda v Madrid Movilidad SA”.

While these cases provided some clarity for employers in dealing with annual leave and sickness absence, they also raised a number of questions which employers were left trying to unravel in their aftermath.


Do Stringer and Pareda Apply Only in the Public Sector?
Stringer applies to employers in the public and private sectors. That case involved a referral from the then House of Lords to the European Court of Justice (ECJ) of certain questions seeking clarification in relation to the Working Time Directive (WTD). Following the ECJ’s decision in the case, the matter returned to the House of Lords and the parties reached agreement that the Working Time Regulations (WTR) in the UK must be interpreted as allowing workers who are on long term sick to accrue annual leave. This therefore is the position under the WTR. The previous Court of Appeal decision in the matter was overturned and the earlier Employment Tribunal and Employment Appeal Tribunal (EAT) rulings reinstated.

Accordingly, the position under UK law for both public and private sector employment is that workers who are on long term sick leave continue to accrue annual leave.

Where the WTR have not properly transposed the WTD to give effect to the ability to carry forward leave etc the matter will continue to be a source of interpretation by the Tribunals. Some Tribunals like the Tribunal in Shah –v- First West Yorkshire Limited will adopt a purposive interpretation of the WTR and give effect to the WTD. However, others may be more restrictive. Undoubtedly challenges will arise as to whether or not those interpretations are in line with the ECJ’s ruling in Stringer and the provisions of the WTD. Ultimately, we would expect this area to be a source of litigation for some years to come.

Unlike Stringer, Pereda was not a referral from the UK Courts, it was a referral from the Labour Court in Madrid. Accordingly, there is no UK decision on the matter and it would be possible to argue that Pereda is only potentially directly effective for workers in the public sector.

However, workers in the public sector can only rely on the doctrine of direct effect where the provision is sufficiently precise and unconditional and does not give Member States substantial discretion in its application.

It has been held by the Court of Appeal that Article 7 of the WTD is insufficiently precise to have to have direct effect as it leaves key gaps relating to individual rights for domestic legislation to fill (Gibson –v- Eat Riding of Yorkshire Council [2000] IRLR598 and British Airways PLC –v- Williams and Others [2009] IRLR491).

If the Gibson and Williams interpretation is correct, then claims by public sector workers relying on the WTD to circumvent any perceived inadequacies in the WTR will not succeed.

However, more recent case law tends to suggest that Article 7 could be held to be directly effective. For example, in R –v- Secretary of State for Trade and Industry ex parte BECTU [2001] IRLR559, the ECJ stated that Article 7 “imposes a clear and precise obligation on member states to achieve a specific result by virtue of which they are to take the measures necessary to ensure that every worker is entitled to paid annual leave of at least 4 weeks”.

Furthermore in Bleuse –v- MBT Transport Limited [2008] IRLR264, the EAT accepted a worker’s argument that the ECJ in that case confirmed that Article 7 of the WTD was directly effective. The EAT went on to interpret the WTR as allowing the German worker’s holiday pay claim to proceed even though, as an overseas worker, he was not ostensibly protected by the legislation. It did so because of the need “to give effect to the directly effective rights under EU law”.

Finally, as can be seen in cases such as Shah above and Rawlings –v- The Direct Garage Door Company Limited ET/2800547/2006, the Employment Tribunals in England are already determining cases on the basis that they must give a purposive interpretation of the WTR in order to give effect to the ECJ’s rulings. In those circumstances, we would urge all employers to err on the side of caution and assume that the WTR may be interpreted as giving effect to the rulings in Pereda and Stringer.