16 October 2013
Long-term sickness leave and accrued holiday pay
Over time, EU case law has established that an employee on long-term sick leave who has been unable to take the statutory annual leave entitlement guaranteed under EU Directive 2003/88/EC, the Working Time Directive, has the right to carry that leave forward to the following year and either take it when they are back at work or take it as payment in lieu of unused holiday if their employment comes to an end in the meantime.
It is not necessary for the employee to make a formal request to carry the statutory leave entitlement forward in this way.
In a domestic case on this topic (Sood Enterprises v Healy), the Employment Appeal Tribunal (EAT) has ruled that only the basic allowance of four weeks’ annual holiday guaranteed under the Directive is automatically carried forward in such circumstances.
An employee can only carry forward the additional 1.6 weeks’ annual leave entitlement guaranteed under the Working Time Regulations 1998 (WTR), which transpose the Directive into UK law, if there is an agreement to this effect between the employer and the employee.
Mr Healy had worked for Sood Enterprises for several years as a handyman and car wash worker. In July 2010, he suffered a stroke and was off sick for a long period. He did not recover sufficiently to return to his job and resigned in June 2011. The company’s leave year was the same as the calendar year, with an annual entitlement of 28 days’ holiday.
In 2010, Mr Healy had taken 11 days’ holiday and his pro rata entitlement for 2011 was 14 days. On the termination of his employment, however, he received no payment in lieu of untaken leave at all. His claim for payment of 31 days’ pay in respect of untaken holiday for the two years in question was subsequently upheld by the Employment Tribunal.
On appeal, the EAT referred to Regulation 13A of the WTR, which deals with the entitlement to 1.6 weeks’ additional annual leave guaranteed under domestic law over and above the minimum allowance of four weeks as laid down by the Directive. Regulation 13A states that a ‘relevant agreement’ may provide for this additional leave entitlement to be carried forward into the leave year immediately following the year in which it was due.
In this case there was no such agreement in place. Therefore, whilst Mr Healy was entitled to payment in lieu for all the days of untaken leave in 2011, he was only entitled to payment for nine days’ untaken holiday in 2010. The additional 1.6 weeks granted under Regulation 13A could not be carried forward and no payment in lieu in respect of this period was due.
Hannah King, associate in the employment law team at B P Collins comments: “Unless employers have specifically agreed terms that allow employees to carry forward their additional holiday entitlement in such circumstances, the amount will be capped at four weeks.“
For legal advice on sickness leave and holiday pay please contact Hannah on 01753 278659 or email firstname.lastname@example.org