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Law for Business

Knowhow - guidance - precedents

13 AUG 2013

Can employees on long term sick leave carry over holiday they have accrued whilst absent?

Clarkslegal

Are employees on long term sick leave entitled to carry over their full statutory holiday entitlement into the next holiday year?

The Working Time Directive provides that member states must ensure that every worker is entitled to paid annual holiday of at least four weeks. This has been implemented in Great Britain by the Working Time Regulations 1998 (WTR) which provide that all workers are entitled to 5.6 weeks' holiday per year. This is made up of the right to 4 weeks under the Directive plus an additional 1.6 weeks. The WTR provide that the first 4 weeks' may only be taken in the leave year and may not be paid in lieu except on termination of employment. However, a relevant agreement (www.practicallaw.com/7-200-3442) may allow the additional 1.6 weeks' to be carried over to the next leave year.

European and UK case has held that workers on long-term sick leave are allowed to automatically carry over 4 weeks' annual leave, without the need to request the time off work. In the case of Sood Enterprises v Healy the Employment Appeals Tribunal (EAT) had to decide whether the Directive requires the additional 1.6 weeks' holiday to also be carried over when the worker is prevented from taking this leave due to long term sickness absence.

Mr Healy worked for Sood Enterprises Ltd as a handyman and car wash worker and was entitled to 28 days' statutory annual holiday. He suffered a stroke in July 2010 and was on sick leave until July 2011 when he resigned due to ill health. His absence spanned two holiday years; in his 2010 holiday year he had 17 days accrued but not taken and in his 2011 holiday year he was entitled pro-rata to 14 days. He received no payment in lieu of accrued holiday on termination and claimed his unpaid holiday pay.

The EAT had to decide whether, under the WTR, the additional 1.6 weeks' annual leave could be carried over in the absence of an agreement between the parties. The EAT held that as there was no agreement between Mr Healey and his employer that holiday could be carried over, he was only entitled to carry over and be paid for 4 weeks in the 2010 holiday year allowance, and his compensation was reduced accordingly.

What does this mean for employers?

This case answers the outstanding question over whether the Directive requires the full 5.6 weeks' to be carried over for employees on long term sick leave, and confirms that, in the absence of an express agreement between the parties, only 4 weeks need be carried over. Employers should check their employment contracts for such an agreement as if carry over is expressly permitted in the contract then they will need to carry over and pay the full 5.6 weeks' holiday.

Liz Timmins, Solicitor, Clarkslegal LLP
Tel: 020 7539 8065
Email: LTimmins@clarkslegal.com

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