There’s not been a shortage of cases about holiday and sick leave in the last few months, and this month is no exception. The Court of Appeal has just settled the debate as to whether an employee on long term sick leave has to have requested to take holiday in the previous holiday year, or requested to carry it over, in order to be entitled to be paid for it on termination of employment.
The background to this case is set out in our article from December last year, where we reported on two apparently contradictory EAT judgments produced within two weeks of each other (Larner and Fraser – both cases against the NHS). The NHS appealed in the Larner case, and the Court of Appeal has now ruled that:
- the European Working Time Directive does not mention any requirement for a sick worker to have to make a request for leave, or request to carry it over, in order not to lose it at the end of the holiday year. Because of a previous recent ruling in the CJEU (Court of Justice of the European Union), Mrs Larner could rely directly on that Directive since the NHS is an “emanation of the State”. Unlike workers in the private sector, she did not have to look to the UK’s Working Time Regulations (WTR) 1998
- it is “presumed” that a worker who is absent on sick leave for the entire leave year is unable to take holiday and therefore may carry it over at the end of the holiday year without making a request to do so. It would be inconsistent to require a worker to request to take holiday during sick leave when the worker clearly has the right to take it after he or she has returned to work
- although not necessary in this case, it is possible to interpret the UK’s WTR 1998 (which do not permit the carryover of leave into another holiday year) to be compatible with the European Directive on this point – the WTR should be read as saying “Leave to which a worker is entitled…may only be taken in the leave year in respect of which it is due, save where the worker was unable or unwilling to take it because he was on sick leave and as a consequence did not exercise his right to annual leave”. The WTR is also to be interpreted as requiring a payment in lieu of this holiday which has been carried forward when employment terminates.
With this ruling at Court of Appeal level, employers in both the public and private sector should now:
- assume that a worker on sick leave for the entire holiday year has their minimum WTR holiday entitlement carried forward, unless they have requested to take it while sick (which an employee may prefer if sick pay has been exhausted)
- allow such workers to take that carried over holiday in the next holiday year
- do not assume that this ruling applies to additional annual leave (1.6 weeks) under the WTR – the latest indications are that it does not
- do not assume that this ruling applies to contractual leave over and above WTR leave – this will entirely depend on what the contract says
- review employment contracts to prevent carryover of contractual leave and potentially additional annual leave in these circumstances
- consider with legal advice whether to ask employees on long term sick leave towards the end of the holiday year if they would like to take holiday whilst they are off sick to avoid it being carried over – however, an employee cannot be forced to do so and there should be no persuasion
- when employment terminates, make a payment for any untaken minimum statutory holiday carried forward from the previous holiday year. If the sickness absence spans several holiday years, seek our advice. There are indications that carryover can be limited but it is not yet clear whether this has to be by national legislation or can be specified by employers.