Employees on long-term sick leave are entitled to automatically carry forward annual leave into the next holiday year, the Court of Appeal has ruled.
The court also confirmed that unused holiday should be carried over even if the member of staff has not requested it.
In the case of NHS Leeds v Larner, it meant that when clerical worker Janet Larner was dismissed, she was also entitled to be paid for the holiday accrued during her sickness absence that she had not been able to take.
Larner worked part-time for the NHS trust when she went on sick leave in January 2009. Her terms and conditions stated that she would accrue annual leave during sick leave, but that it could only be carried over in exceptional circumstances.
Larner eventually had her employment terminated in April 2010, and was told that “a payment in lieu of notice and any outstanding leave will be made to you”.
Larner originally brought an employment tribunal claim for unpaid holiday pay under the Working Time Regulations 1998, because NHS Leeds had not paid her for leave that was accrued in the April 2009 to March 2010 holiday year.
Larner was successful in her claim but NHS Leeds appealed. However, both the Employment Appeal Tribunal and Court of Appeal have now rejected the employer’s argument that Larner lost her statutory holiday entitlement, as she had not made any requests to take annual leave or carry it over.
Legal experts warned that the ruling, while providing clarity, would have cost implications for employers.
Chris Wellham, counsel in the employment team at Hogan Lovells, said: “Allowing long-term sick employees to carry leave forward automatically and to be paid for all the leave that has accrued on termination of employment could be very costly for employers.
“This opens the way for employees on long-term sickness absence to claim holiday pay for the whole period of their absence when their employment terminates. For an employee who has been absent for two leave years for example, this could represent nearly three months’ pay.”
Richard Kenyon, head of employment and pensions at Field Fisher Waterhouse, added: “While the case provides some clarity, it is unlikely to be welcomed by employers, given the practical advantages of requiring workers to make such requests. Nor is it likely to be an advantage overall to long-term sick employees. Employers will now have more incentive to dismiss rather than allow sick leave to roll on and holiday to accrue unchecked.”
This decision in the UK follows a separate ruling on sick leave and holiday entitlement in the Court of Justice of the European Union. The court held in the case of Anged v Fasga, that a worker who becomes sick while on a scheduled holiday from work is entitled to take that annual leave at another time when they are not ill.
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