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29 August 2013

Carrying forward statutory holiday

Robert Hickford reports on a recent EAT decision on the ability for employees to carry forward accrued holiday during periods of long-term sickness absence.

We reported previously that in the case of Larner, the Court of Appeal had ruled that workers were entitled to be paid accrued holiday pay on termination following a period of sick leave, regardless of whether a prior request for holiday had been made. This ruling did not determine whether this applied equally to the additional 1.6 weeks’ (eight days) statutory leave (under Regulation 13(A) of the Working Time Regulations 1998 (‘WTR’)), as to the four week basic statutory entitlement under Regulation 13 WTR.

The EAT has recently considered in Sood Enterprises Ltd v Healy whether the additional 1.6 weeks’ statutory annual leave under Regulation 13(A) of the WTR could also be carried over.

Facts

In July 2010, Mr Healy suffered a stroke and was off work until he resigned on 6 June 2011.  He had 17 days of accrued but untaken holiday for the 2010 holiday year and accrued a further 14 days’ holiday in 2011.  On the termination of his employment he was not paid in respect of any of his accrued holiday entitlement, so Mr Healy brought a claim in the employment tribunal for unpaid holiday pay.

The employment tribunal held that there was no requirement for Mr Healy to expressly request holidays when on sick leave, relying on the previous decision in Larner.  It held that Mr Healy was entitled to be paid in lieu of holiday accrued under the WTR for both leave years, including the additional 1.6 weeks.

Sood appealed to the EAT on the following grounds: 1) the tribunal was wrong to have included the additional 1.6 weeks’ holiday in its calculations; and 2) decisions of the European Court of Justice relating to the Working Time Directive are not directly effective against Sood as a private employer.

Decision

The EAT upheld the tribunal’s decision with regard to the 2011 leave year.  However, it allowed Sood’s appeal against the decision with regard to the 2010 year, holding that Mr Healy was not entitled to carry over the additional 1.6 weeks’ leave to the following leave year.

The EAT noted that the WTR expressly states that the additional 1.6 weeks’ leave cannot be carried over unless there is a relevant agreement between the parties (Regulation 13A(7)).  It was satisfied that this was a legitimate restriction in accordance with the Working Time Directive.

As there had been no agreement between the parties providing for carry-over of the additional 1.6 weeks’ leave, it was ruled that Mr Healy could not claim in respect of the additional 1.6 weeks’ holiday.

The second ground of appeal was not upheld on the basis that the EAT was satisfied that the Directive applied to and was enforceable against both public and private employers.

Comment

This decision provides clarity (and some comfort for employers) that whilst the four week basic statutory entitlement to accrued holiday can be carried over in some circumstances, without express agreement the additional 1.6 week entitlement cannot.

We are still awaiting the Government’s response to their 2011 consultation on proposed amendments to the WTR, which will help to clarify the situation in relation to accrued holiday during sickness absence.

A copy of the EAT judgment can be found here.