4 February 2008
Last week the Advocate General gave an opinion on two cases referred to the European Court of Justice by the UK. One questioned the entitlement to paid holiday under the Working Time Directive, the other the scope of protection from discrimination under the Equal Treatment Framework Directive. In both instances the opinion found in favour of the Claimants’ arguments. What is the significance for employers?
As a basic principle, UK courts and tribunals must take account of European law in all cases before them and they must interpret and develop the law in a way which is compatible. As a consequence, one of the functions of the European Court of Justice (ECJ) is to answer questions on interpretation which have been referred to it by a national court. The ECJ judges are assisted by advocate-generals who make submissions and recommendations. Although their opinion is not binding, it is a good indication of the outcome and is followed in the majority of cases. The ECJ will issue a preliminary ruling on the effect of a treaty or directive but importantly does not decide the outcome of the case, which is referred back to the originating court or tribunal to apply the law to the facts of the case.
In Coleman v Attridge Law (2006) the issue arose as to whether a purposive construction of the Disability Discrimination Act (DDA) was required, or could be achieved, to be compatible with the Framework Directive. Mrs Coleman sought to bring a number of discrimination claims under the DDA against her employers even though she herself was not disabled. She alleged that she had been subjected to less favourable treatment as a result of her son’s disability and argued that, although protection from discrimination by association was not afforded under the DDA, it should be construed to have that effect so as to comply with the Framework Directive.
In the Framework Directive discrimination is expressed as treatment “on grounds of religion or belief, disability, age or sexual orientation” whereas the DDA uses the words “on the ground of the disabled person's disability” which has the effect of limiting protection only to those individual’s with a disability. The original tribunal accepted that a "plain reading" of the Framework Directive would suggest that discrimination by association was intended to be covered, which was not the case based on a literal interpretation of the DDA. However, the tribunal was reluctant to imply the necessary wording. On appeal the EAT held that appropriate wording could be inserted to the DDA, without it being misconstrued, so as to cover discrimination by association. However, it agreed that guidance should be sought from the ECJ on whether such an approach was necessary.
The Advocate General’s opinion, delivered on 31 January 2008, is that the Framework Directive does cover discrimination by association. By using the words “on grounds of” means that an employee can be a victim of unlawful disability discrimination even though they are not disabled, if the ground for that person’s treatment is a third person’s disability. If the ECJ follow this opinion, and the EAT imply the additional wording into the DDA, employers potentially face costly discrimination claims from employees, who like Mrs Coleman, are responsible for the care of a disabled person. This will also mean that discrimination by association will be prohibited on any of the grounds covered by the Framework Directive, including age. Provisions in the UK only currently protect discrimination by association on grounds of religion or belief and sexual orientation.
The Advocate General has also handed down an opinion in Stringer and others v Her Majesty's Revenue and Customs (2006) concerning the right to a minimum of 4 weeks’ paid leave under the Working Time Directive and whether this applies to a worker who is on long term sick leave.
This case, previously known as Inland Revenue v Ainsworth & Ors follows an appeal to the House of Lords from the Court of Appeal. The CA overturned an earlier EAT decision and held that the purpose of the statutory holiday entitlement was to grant "leave" to workers from their normal duties to work or be available for work. Consequently, a worker could not take annual leave during a period in which he is absent on sick leave and is not under an obligation to work. Furthermore, if a worker has no entitlement to take annual leave because he is absent on account of sickness, he is not entitled to payment for unpaid holiday on termination of employment. Therefore, the position in the UK is currently that an employee who has been absent from work for a whole year by reason of sickness is not entitled to four weeks’ paid annual leave during that year when he has been unable to work at all. However, as the Working Time Regulations do not expressly provide for a pro rata reduction in an employee's entitlement to holiday, the position has been less clear where a worker has only been absent for part of the year.
The House of Lords referred two questions to the ECJ. Firstly, is a worker on indefinite sick leave entitled to designate and take a future period as paid annual leave and secondly, how should payment in lieu on termination be calculated if a worker has been absent on sick leave for all or part of the leave year?
The Advocate General has said that a worker on indefinite sick leave can not be excluded from the right to a statutory period of holiday, which will therefore continue to accrue during their absence. However, although the worker may designate a future period as paid annual leave, annual leave and sick leave are mutually exclusive and not interchangeable, so a worker cannot take holiday during their sick leave. On the second point, when employment terminates, the Directive requires workers to be paid in lieu for the annual leave which they have accrued but not taken due to illness and this is so whether the worker has been on sick leave for all or part of the leave year in question. Pay in lieu should be calculated at a worker's normal rate of pay to ensure that they are financially capable of taking a period of paid rest after the termination of one job before starting another.
This opinion, if followed, will obviously have financial implication for employers. In fact, both decisions will go towards strengthening the arguments of Euro-sceptics who claim the EU is too powerful, too expensive and undermines the nation. However, not everyone sees the EU as the devil in disguise and, as these cases also illustrate, it serves to protect the fundamental rights and freedoms of individuals, what ever the cost.