CIPD: Sickness absence does not extend unused holiday leave indefinitely @cipdlondon @cmi_managers #HR #Law

CIPD CIPD (:  EAT finds untaken holiday expires 18 months after leave year. In the case Plumb v Duncan Print Group the Employment Appeal Tribunal had to decide whether a worker who had been off sick for nearly four years, and who had not taken or requested any holiday, was entitled to be paid in lieu of all his unused holiday when his employment ended.

Under the Working Time Regulations 1998, workers are required to take their statutory holiday entitlement in the year it is due – it cannot be replaced by a payment in lieu other than when the worker leaves employment. However, in Pereda v Madrid Movilidad, the European court held that if workers do not wish to take their holiday entitlement during sickness absence, it can be taken at some other time even if this meant carrying it over to the next leave year. Following this decision, the Court of Appeal held in the case NHS Leeds v Larner that the working time regulations must be read to allow workers to carry over untaken holiday into the next leave year where they are “unable or unwilling” to take it because they are on sick leave.

Plumb was on sick leave from April 2010 until his employment ended in February 2014. He did not ask for annual leave until September 2013, when he requested permission to take the annual leave he had not taken since 2010. The employer agreed to pay for holiday in the current leave year but refused to pay for the 2010, 2011 and 2012 leave entitlements.

An employment tribunal rejected Plumb’s claim that the employer had breached the working time regulations by failing to pay him in lieu for his holiday entitlement from 2010 to 2012. Referring to the case NHS Leeds v Larner, the tribunal decided the relevant issue was whether Plumb was “unable” to take his holiday due to sickness, but there was no persuasive medical evidence to show this was the case. The fact that Plumb had continued to work 12 hours at the weekend at his local B&Q store and went on a week’s holiday in 2012 severely damaged his case. Plumb appealed.

The Employment Appeal Tribunal held that the Court of Appeal’s decision in Larner did not lay down a legal principle that employees on sick leave needed to demonstrate their medical condition prevented them from taking annual leave. Furthermore, workers who do not “wish” to take holiday during sick leave are entitled to take it at a later date. However, Plumb was not entitled to holiday pay for 2010 to 2012 because the European court in KHS AG v Schulte had ruled that the right to carry over periods of annual leave in to subsequent years was not unlimited. The International Labour Convention allows holiday to be postponed for up to 18 months after the end of the leave year, so the working time regulations had to be read as permitting a worker to take annual leave within 18 months of the end of the leave year in which it was accrued but not taken because of sick leave.

The previous government published proposed amendments to the working time regulations in 2012 to reflect various European court judgments but as yet there have been no developments. The Larner case started the process of the courts interpreting the regulations in the light of those judgments and this EAT ruling provides even more certainty for employers. It establishes two clear principles:

  • within the context of the Larner case, workers on sick leave do not have to demonstrate they are unable to take annual leave because of their medical condition in order to retain that leave, and if they do not wish to take holiday during sick leave, they are entitled to take it at a later date
  • carried over leave untaken because of sickness has to be taken within 18 months of the end of the leave year in which it was accrued.

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