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EAT rules on holiday pay and sickness absence

Employment Law & HR
BG Purple

A recent EAT judgment has clarified the question of when employees are entitled to holiday pay in respect of previous years.

Under the Working Time Regulations 1998 employees are required to give notice to employers of their intention to take leave.  

In Fraser v. South West London St George’s Mental Health Trust, the employee, who was on long term sick leave, attempted to claim four years’ worth of holiday pay from her employers on termination of her employment. The EAT found that there was no question that the leave had not accrued in each holiday year despite the fact that the employee was not at work.  However, they went on to hold that the duty is on the employee to take the leave to which she is entitled in the holiday year in which that leave falls due.  In this case, the employee had not given notice in the relevant holiday year to take annual leave and as such could not carry the leave forward from one holiday year to the next. The Employment Appeals Tribunal held that she was not entitled to any holiday pay accruing from previous holiday years as a result.  

This case overturns an earlier case, Canada Life v. Gray, in which the EAT held that employees on long term sick leave were entitled to receive payment on termination for periods of untaken annual leave from past years without giving notice or taking the leave.  

In another leading case on this question, Pereda v. Madrid Movillad SA, the European Court of Justice found that employees on long term sick leave can choose whether to take their statutory leave when off sick or to request that the leave be deferred to the next holiday year. In the present case the EAT affirmed this view and held that employees can avoid losing their holiday entitlement by requesting deferred leave. However, the employee in question had not requested that her leave be carried over to the next year.

The options for employees on long term sick leave who do not wish to lose their holiday entitlement are to either give notice of their intention to take the leave or request that the leave be deferred until the next holiday year. If they do defer, they will be entitled to be paid for the untaken leave on termination of their employment.

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