HM Revenue and Customs v Stringer
| Jurisdiction | England & Wales |
| Judgment Date | 13 December 2006 |
| Judgment citation (vLex) | [2006] UKHL J1213-1 |
| Court | House of Lords |
| Date | 13 December 2006 |
[2006] UKHL J1213-1
HOUSE OF LORDS
and others
Request for a preliminary ruling by the court of Justice of the European Communities pursuant to Article 234 of the Treaty Establishing the European Communities
ORDERED TO REPORT
The Committee (Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Hope of Craighead, Lord Walker of Gestingthorpe and Lord Brown of Eaton-under-Heywood) have met and considered the cause Her Majesty's Revenue and Customs (Respondents) v. Stringer and others (Appellants). We have heard counsel on behalf of the appellants and respondents.
This is the considered opinion of the Committee. The cause should be referred to the Court of Justice of the European Communities for a preliminary ruling pursuant to Article 234 of the Treaty establishing the European Communities.
In this preliminary reference the Court of Justice is asked to interpret Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time, formerly Directive 1993/104/EC. In particular, it is asked to provide answers to questions concerning the right to annual leave granted by Article 7 of the Directive as it relates to employees on sick leave.
Introduction
The dispute before the House of Lords relates to the Working Time Regulations 1998 (SI 1998/1833) ("the WTR"), which implement the Directive in national law. It relates to the entitlement of every worker to paid annual leave of at least four weeks conferred by Article 7 ofthe Directive. The issues are (i) whether or not a worker who is absent on sick leave is entitled to take paid annual leave during the period of sick leave; and (ii) the extent, if any, to which a worker who has been absent on sick leave for all or part of the leave year in question is entitled to an allowance in lieu on termination of employment.
A preliminary reference by Landesarbeitsgericht Dösseldorf – Germany (Preliminary Reference C-350/06) for a preliminary ruling on questions arising under Article 7 of the Directive on entitlement to leave or an allowance in lieu of annual leave during a long period of incapacity for work was notified to relevant British authorities by a letter dated 27 September 2006 from the Court of Justice. Given the similarity of issues, it is suggested that it would be appropriate for the present case and Preliminary Reference C-350/06 to be heard together.
The Appellants ("the workers") were all employed by the Respondents ("the employer"). The workers fall into two categories.
The first category concerns Mrs Khan. She was absent on indefinitesick leave for several months, receiving sick pay. On 10 October 2003, during the course of that sick leave, she gave notice to the employer thatshe wished to take 20 days' paid annual leave from 17 November to 11 December 2003. The employer refused her request. She brought proceedings before the Employment Tribunal based on regulation 13 WTR, claiming that shewas entitled to take annual leave and to be paid during her annual leave under regulation 16 WTR. The Employment Tribunal upheld her claim andordered the employer to pay her the sum of £595.32.
The second category concerns Mr Ainsworth, Mrs Kilic and Mr Thwaites. They were each dismissed by the employer. Each had been absent on long-term sick leave and was absent on sick leave throughout the leave year in which his or her dismissal occurred. None of them had taken any annual leave during that year. Each brought proceedings before the Employment Tribunal, claiming payments under regulation 14 WTR (set out below), which deals with the position where the employment relationship is terminated. In each case the Employment Tribunal upheld their claims, calculated the compensation due in accordance with the formula in Regulation 14(3)WTR and awarded Mr Ainsworth £16.14, Mrs Kilic £454.74 and Mr Thwaites £967.14 (there is no dispute about the calculation of the sums awarded).
The employer appealed each of the decisions to the EAT. The EAT dismissed the appeals, stating that it was inappropriate to overrule recent EAT decisions, all of which were against the employer's arguments. The EAT granted permission to appeal to the Court of Appeal.
The Court of Appeal (Kennedy, Laws and Maurice Kay LJJ), hearing all of the cases together, allowed the employer's appeal in each case. It held (amongst other things) as follows:
(1) In the case of Mrs Khan, the Court of Appeal accepted the submission of the employer that a worker cannot take annual leave for the purpose of regulation 13 during a period in which the worker is absent on sickness leave and is consequently not under an obligation to work.
(2) In the cases of Mr Ainsworth, Mr Kilic, and Mr Thwaites, the Court of Appeal accepted the employer's argument that, for the purpose of calculating the compensation due on termination under regulation 14, if a worker had nil entitlement to take annual leave under regulation 13 because he or she was absent because of sickness, then he or she was not entitled to a compensation payment under regulation 14.
The employees all appealed to the House of Lords. After hearing counsel for the parties, the House decided that the cause should be referred to the Court of Justice for a preliminary ruling to enable it to dispose of the appeals.
The Community Legal Provisions
Directive 2003/88/EC provides as follows:-
"Article 1 - Purpose and scope
(1) This Directive lays down minimum safety and health requirements for the organisation of working time.
…
Article 7 - Annual leave
(1) Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.
(2) The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.
…
Article 15 - More favourable provisions
This Directive shall not affect Member States' right to apply or introduce laws, regulations or administrative provisions more favourable to the protection of the safety and health of workers or to facilitate or permit the application of collective agreements or agreements concluded between the two sides of industry which are more favourable to the protection of the safety and health of workers."
The National Legal Provisions
Regulations 13 and 16 WTR implement Article 7(1) of Directive 2003/88/EC in the United Kingdom, and, in part also, Article 7(2) of the Directive. They provide as amended by the Working Time (Amendment) Regulations 2001 (SI 2001/3256) (so far as material) as follows:-
"13(1) Subject to paragraph (5), a worker is entitled to four weeks' annual leave in each leave year.
…
(5) Where the date on which a worker's employment begins is later than the date on which (by virtue of a relevant agreement) his first leave year begins, the leave to which he is entitled in that leave year...
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