Sick Leave

Sickness Absence and Holiday Pay

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In the recent EAT case of Sood Enterprises v Healy it was held that additional annual leave cannot be carried forward into the next leave year, unless there is an agreement in place between the parties.

One of the difficult questions concerning the relationship between statutory holiday rights and long-term sick leave is the apparent incompatibility between regulation 13(9) of the Working Time Regulations 1998 and the Directive regarding carry-over of holiday for workers who have been unable to take the holiday due to sickness. In 2012, the Court of Appeal took the view in the case of NHS Leeds v Larner that it was possible to interpret the Working Time Regulations 1998 in line with the Directive so as to allow carry over of holiday of up to 4 weeks (i.e. 20 days) where a worker was on long-term sick leave. However, the court declined to decide whether the Directive requires the additional 1.6 weeks (i.e. 8 days) under regulation 13A to be treated in the same way as the four weeks’ leave under regulation 13.

In Sood Enterprises v Healy, the EAT have confirmed that the Working Time Directive does not require carry-over of the additional 1.6 weeks’ leave under regulation 13A of the Working Time Regulations 1998 where a worker is prevented from taking holiday due to long-term sickness absence.

So at the present time, if, for example, a worker is on long-term sick leave for the whole of 2013 and their holiday entitlement is the statutory minimum 28 days, then 20 of those days automatically carry forward into the next leave year (i.e. into 2014) and the remaining 8 days do not, unless there is an agreement between the employer and the worker for the 8 days to be carried forward. That is the position for the time being and will remain so unless and until a higher court rules otherwise or it is changed through legislation.

Written by
Edward Aston
6th August 2013

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

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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

Holidays – Use it or lose it – even on long term sick leave?

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Yes said the EAT (Underhill P) in Fraser v St George’s NHS Trust unless the employer agrees for it to be carried over to the next year.

Workers continue to accrue annual leave entitlement during sickness absence, and workers can choose to take annual leave at the same time as being absent due to sickness and be paid for it. But notice to take annual leave must be given to the employer to be entitled to payment for holiday pay whilst on sick leave. If notice is not given in the leave year then the holiday entitlement will be deemed as unused and will be lost. It cannot be carried over unless the employer agrees to this.

In this case Ms Fraser was injured at work. She was on sick leave for four years until her dismissal. For the last two complete years of her employment she received no pay. On the termination of her employment she sought 4 weeks holiday pay in relation to each of those two years. She did not seek it in respect of the year in which she was dismissed as accrued holiday pay for that year was rightly paid by her employer.

In the light of Stringer v HM Revenue & Customs Commissioners [2009] ICR 932 there was no doubt that the employee had accrued the right to leave during the years in question. However, the employer argued that if she wanted to exercise that right she had to give notice to the employer under Reg 15 (1) of the Working Time Regulations and she had not done this.

The EAT held that an employee is only entitled to holiday pay under Reg 16 (1) if he/she has actually taken the leave to which the pay relates and as Ms Fraser had not done so in accordance with the WTR by giving notice pursuant to Reg 15, her claim failed. In other words, use it or lose it. In reaching this decision, the EAT decided that some of the earlier decisions on this issue in the EAT were wrong.

The EAT also held in this case that there was no obligation on the employer to notify its employee of the fact that if they do not exercise their right to holiday during the leave year, then they will lose it or in the case of an employee on sick leave not be paid holiday pay.