From European Court -- Period of Sickness Occurring During Holiday

(This information was provided to me by the solicitor firm CMS Cameron McKenna LLP in London.)

The European Court of Justice ("ECJ") has held in Pereda v Madrid Movilidad, that employees who are sick during scheduled annual leave should be permitted to reallocate their holidays, even into the next holiday year.

In 2007, Mr Pereda was injured and he requested his employer to allocate a new period of paid annual leave on the ground that he had been on sick leave during the period of annual leave originally allocated to him. His employer rejected the request. The ECJ ruled that his period of sick leave should not have counted towards his holiday time on the basis that employees are entitled to a minimum period of 4 weeks paid annual leave under the Working Time Directive ("WTD"). The ECJ emphasized the right of employees to a period of actual rest for relaxation and leisure during annual leave, as opposed to sick leave during which an employee is recovering.

This decision is a new interpretation of the WTD; following the ECJ and the House of Lords' recent rulings on the Stringer case that holiday continues to accrue during sick leave. The House of Lords decision in Stringer means that a worker is entitled to take paid annual leave even though they are not at work due to extended sick leave.  The question of what would happen if sickness coincided with scheduled leave was not addressed in the Stringer case. Although unlikely to be welcomed by employers, the ECJ's ruling in Pereda has helpful addressed this void however it remains unclear whether employees will be able to claim retrospectively.

As a result of the decision on Pereda, employers should be prepared to manage attempts by workers to exploit the ECJ's decision. A worker could effectively increase their entitlement to annual leave by alleging that they were sick whilst on holiday. Strict requirements on supporting medical evidence should be enforced to avoid abuse.

The judgment is immediately effective for public sector employers but private sector workers may not be able to benefit from this decision until the Government amends the Working Time Regulations.  Most employers therefore have time to consider their policies and perhaps even implement changes before the law changes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Sentences of up to 10 years for Insurers or Brokers breaching Export Control Order

The International Traffic in Arm Regulations ("ITAR") should be well understood by those who operate in the United States. However, if you operate in the UK, you need to also be cognizant of the Export Control Order.

The Export Control Order 2008 is intended to restrict the international movement of arms or other military goods, and penalties for breaching these trade controls can be severe and include an unlimited fine as well as a prison sentence of up to 10 years. Insurers and brokers are caught by the Order if they are involved in insuring, or arranging insurance, in relation to actions prohibited under the terms of the Order.

The Export Control Order is enforced by H.M. Customs & Excise and came into effect on 6th April 2009. Insurance companies and brokers will be expected to comply with the Order, and must have structures in place to ensure that the Order is not being breached. Breaches of the Order can result in criminal penalties being imposed on individual underwriters and brokers as well as their employers, including imprisonment for up to 10 years or unlimited fines.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.