Holiday Pay – Court of Appeal rules on whether holiday can be carried over

The Court of Appeal has recently announced its decision in the case of NHS Leeds v Larner.

Mrs Larner had been employed by NHS Leeds for 20 hours a week and her contract of employment stated that during a period of sick leave she would accrue holiday but that she was only entitled to carry it over in exceptional circumstances.

Mrs Larner was on sick leave for the whole of the holiday year 2009/2010 and during this time took no holiday entitlement and neither did she ever request for it to be carried over into the 2010/2011 holiday year. During the early part of 2010/2011 holiday year NHS Leeds dismissed Mrs Larner.

As Mrs Larner had not requested to take any holiday nor asked to carry it over, NHS Leeds did not pay her any holiday pay in lieu of notice for the holiday year 2009/2010 having concluded that this holiday had been lost. Mrs Larner made a claim for unpaid holiday under the Working time Regulations 1998.

The Court of Appeal ruled that Mrs Larner was entitled to be paid for the annual leave in 2009/2010 that she had not been able to take due to her illness and that although no request had been made by Mrs Larner to carry over the holiday this was an automatic process. Although this decision was binding on the NHS which is an emanation of the state, the Court of Appeal held it would apply to private employers as well.

This ruling puts an end to the conflict between the two earlier Employment Appeal Tribunal (EAT) cases of NHS Leeds v Larner and the later decision of the EAT in Fraser v South West London St George’s Mental Health Trust. In the latter case the EAT had ruled that unless the employee requested to carry over the holiday the employer had no obligation to carry it over or pay it in lieu of notice. This is now overruled by the Court of Appeal.

Written by
Edward Aston
30th July 2012

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