Case update (1): Sick leave and holiday pay

office-holiday-250Summary: Is a worker who has been absent on sick leave, but well enough to take annual leave, entitled to be paid in lieu of unused leave when their employment terminates?

Yes, but such leave cannot be carried forward indefinitely and is limited to 18 months’ carry forward from the end of the leave year, says the EAT in Plumb v Duncan Print Group Ltd available here.

Background: The Working Time Regulations 1998 (WTR) provide that the four weeks statutory annual leave must be taken in the leave year in respect of which it is due. However, there is an exception to this rule for workers that are on sick leave and they are able to carry over their accrued annual leave.

Facts: The employee, Mr Plumb, was employed as a printer for Duncan Print Group Ltd. Having suffered an accident at work, Mr Plumb remained on sick leave between 26 April 2010 and 10 February 2014, when his employment terminated. Despite being sufficiently fit to request and take holiday, it was not until September 2013 that the employee requested permission to take all of his accrued holiday from 2010. The employer agreed to pay for accrued holiday for the current leave year (2013/2014), but refused to pay for unused holiday for the previous three leave years.

Following the termination of his employment, the employee brought a claim under the Working Time Regulations for payment in lieu of untaken leave for the 2010/2011, 2011/2012 and 2012/2013 leave years.

The employee argued that the right to carry over and accrue holiday whilst off sick (see Background above) was without any time limitation and that this was the case regardless of whether he was unwilling or unable to request to take holiday at an earlier date.

The EAT held that:

  • An employee who is on sick leave does not need to show that he is unable, by reason of his medical condition, to take annual leave.   Such an employee may choose to take leave during the absence, but if he is unwilling to do so he is entitled to take the leave at a later date;
  • However, there is not an unlimited right to carry over and accrue periods of annual leave under EU law. At most, EU law requires that workers who are on sick leave may take their annual leave within 18 months of the end of the relevant leave year if they were unable or unwilling to take it because they were sick. (This 18 month period is set out under the relevant International Labour Organisation (ILO) convention).
  • Therefore the EAT concluded that the WTR should be read as limiting the worker to taking their statutory 4 weeks’ annual leave within 18 months of the leave year within which the leave accrued.
  • Mr Plumb was entitled to receive payment in lieu of untaken annual leave for 2012, but not for 2010 or 2011.

Implications: This is a helpful decision for employers managing employees on long term sick leave. It confirms in UK law the 18 month limit on carry forward of statutory holiday entitlement and the irrelevance of the reason for not taking the holiday earlier.

Please note that the EAT gave both parties permission to appeal to the Court of Appeal so watch this space for any further updates…