Annual leave and long term sickness

Friday, 29 July 2011 00:00

The issue of staff unable to take their full holiday entitlement because of sickness absence has been an issue vexing businesses, employees, lawyers, and the courts. There have been conflicting decisions for years in the Court of Appeal, the House of Lords (now the Supreme Court) and the European Court of Justice (ECJ).

The last word from the House of Lords in the case of HMRC –v- Stringer was broadly that employees were entitled to request leave during a holiday year even though they were off sick. If holiday was requested, the employee was entitled to take and be paid for it during that year. If an employee did not request leave, it was lost (save for any contractual leave above the statutory minimum which is dealt with by the employment contract).

However, this conflicts with a case in the ECJ (Pereda –v- Madrid Movilidad) which found that holiday should be carried over into a subsequent holiday year if the employee could not take it because of sickness. This case has caused problems because currently the Working Time Regulations do not allow carry over at all.

The case of NHS Leeds –v- Larner has changed the position again. Mrs Larner was off sick for a full holiday leave year and did not request any holiday. When her employment ended the following year she sought to recover a payment in respect of the previous holiday year. The EAT has decided that Mrs Larner, and all employees unable to take holiday because of long term sickness, do not lose their holiday entitlement at the end of the year simply because they did not request to take it. Accordingly, on termination of employment, an employee can claim for lost holiday in previous years.

The matter does not end there. There is still an apparent conflict between the European cases and the Working Time Regulations which will need to be resolved.

Additionally, another case is going through the European courts at the moment (KHS AG –v- Schulte) which is likely to find that an entitlement to take holiday many years after it accrued is not compatible with the aims of annual leave provisions generally. Accordingly, it looks set to allow a time limit by which holiday that arises in these situations is lost.

So it seems the position is likely to change again. Watch this space...