Case update (2): Sick leave, holidays & carry over

Summary: Do employees have the right to automatically carry over additional leave beyond the statutory four week minimum when employees are off sick?

No, says the EAT in Sood Enterprises v Healy, a judgment that caps the amount of holiday allowance that employees are able to automatically carry over while off on long term sick leave, at the basic minimum entitlement of four weeks.

Facts:  Mr Healy had been on sick leave from June 2010 to July 2011 when he resigned due to ill health. He claimed payment in lieu of accrued, but untaken, holiday during 2010 and 2011.  The EAT agreed with recent European and UK case law that an employee on long-term sick leave is allowed to automatically carry over the “basic allowance” of four weeks’ annual leave that is guaranteed under the European Directive, without the need to request it. However, the EAT held that employers were not compelled to carry over the “additional allowance” of 1.6 weeks’ annual leave granted under the UK’s Working Time Regulations, unless there had been a prior agreement.

Such a prior agreement may be found in documents such as contracts of employment, company policy or collective agreement.  There was no such agreement between Mr Healy and his employer. He was therefore only entitled to carry over and claim payment for the “basic allowance” of four weeks per leave year, less any holiday taken prior to his period of sick leave.

Implications:  

Employers with employees on long-term sick leave should:

• check whether they have agreed with the employees that they can automatically carry over the “additional” 1.6 weeks’ annual leave;
• if no such agreement is in place, and you do not wish to make any such agreement with employees, calculate the number of carry over days only up to the statutory limit of 4 weeks (or 20 days for a FTE); and
• consider whether specifically to inform any such employees of the limited right to carry over holiday whilst on long-term sick leave.