Kate Hodgkiss, a Partner in our Edinburgh office, comments: the EAT has handed down a useful decision in relation to the holiday entitlement of workers who are absent on long term sick leave.
By way of reminder, the Working Time Regulations 1998 (WTR) adopt a “use it or lose it approach” to holiday entitlement so that, ostensibly, an absent worker loses, and may not carry forward, any leave entitlement untaken at the end of the holiday year.
This approach, however, conflicts with the requirements of the Working Time Directive (WTD), as clarified by the case law of the ECJ. Under ECJ case law, workers who are unable to take holiday because of sickness absence must be allowed to carry their leave forward, although the length of time for which they may carry forward is limited. In the Schulte case, the ECJ approved a 15 month carry forward limit which was specified in an industry wide collective agreement.
The UK courts have sought to resolve the conflict between the UK and European positions by interpreting the WTR to give effect to the European case law. In 2012, the Court of Appeal considered certain of the issues arising from the conflict in the Larner case, but various questions have remained unresolved since then, including the legitimate duration of a limit on carry forward in the UK.
In Plumb v Duncan Print Group, the employee was absent on sick leave for four years. On termination, he sought payment for 60 days’ holiday accrued during 2010, 2011 and 2012. In its recent judgment, the EAT held that –
*An employee who is on sick leave need not demonstrate that he is unable, by reason of his medical condition, to take annual leave. Such an employee may choose to take leave during the absence, but if he does not wish to do so, is entitled to take the leave at a later date; and
*EU law does not confer an unlimited right to carry over periods of annual leave to subsequent years and the WTD, at most, requires that employees on sick leave are able to take annual leave within a period of 18 months of the end of the leave year in respect of which the leave arises.
*Mr Plumb was therefore entitled to receive payment in lieu of untaken annual leave for 2012, but not for 2010 or 2011.
This is a helpful decision for employers managing employees on long term sick leave, as it confirms in UK law the 18 month limit on carry forward of holiday entitlement (which is the maximum limit specified in the relevant ILO convention). This 18 month limit will apply where the employment contract is silent on the duration of carry forward, and while it may be possible for a shorter period to be set by the contract, that period should not be less than 12 months.
Note that permission to appeal has been granted in this case which will provide a useful opportunity for the Court of Appeal to consider the question of holiday carry forward and thus to provide even greater certainty for employers on this issue.