The Court of Appeal has confirmed that workers on sick leave can carry forward untaken annual leave to the next leave year. It held that they will not lose the holiday if they do not ask for it be carried over before the end of the leave year.
In NHS Leeds v Larner, Mrs Larner was on sick leave for the whole of the 2009/10 leave year. She did not take any annual leave or request that her holiday be carried forward to the following leave year. Mrs Larner was dismissed in April 2010 while still on sick leave. NHS Leeds refused to pay her leave from 2009/10 so Mrs Larner brought a claim for her statutory holiday entitlement.
NHS Leeds argued that Mrs Larner had lost her entitlement to the 2009/10 leave as she did not ask to take or carry the leave forward. The Court of Appeal held that workers do not have to ask to carry holiday over. It said that the Working Time Regulations 1998 (WTR) should be interpreted to allow workers on long term sick leave to carry over their accrued four weeks’ statutory holiday to the extent that they are unable or unwilling to take it in the current leave year due to sickness absence.
The Court of Appeal distinguished this case from Fraser v Southwest London St George’s Mental Health Trust where the EAT held that Mrs Fraser lost her holiday entitlement because she had not requested to take it or carry it over to the following year. In Fraser, Mrs Fraser recovered and was able to return to work before her employment was terminated.
The Court of Appeal did not consider whether the additional 1.6 weeks’ statutory holiday entitlement could be carried forward. However following the ECJ’s decision in Niedel v Stadt Frankfurt am Main, the current position is that under the WTR this additional holiday can only be carried over if agreed in an employee’s contract or other relevant agreement.
Practical points for employers:
When dealing with sickness absence, a "use it or lose it" rule for holiday entitlement should be exercised with caution. Any restriction on carrying holiday forward should not apply to the four weeks' statutory leave to the extent that workers are unable to take it due to sickness absence. However a distinction can be drawn between those employees who are dismissed before returning from sick leave and those who return to work but fail to request to take or carry over untaken holiday.
Following the ECJ's decision in KHS AG v Schulte, it may be possible to limit the period during which workers can carry forward untaken annual leave. In Schulte, this period was 15 months from the end of the relevant holiday leave year.
While those on long term sick leave cannot be forced to take holiday during their absence for ill-health, they can opt to do so. Consider reminding workers of this to avoid them accumulating significant holiday entitlement.