Employment Law Solutions. Expert advice... more personal

Holiday pay and Sickness

All workers have the right to 5.6 weeks paid holiday in each leave year. This statutory right cannot be replaced by a payment in lieu except on termination of employment. The objective in providing such a right is to ensure that a workers health and safety is protected. The right originates from the European Working Time Directive which is implemented in the UK by the Working Time Regulations 1998 (‘the WTR’).  

 The difficulty in practice has arisen where the worker has not exercised their right to annual leave and whether that therefore means that they should still receive holiday pay. Much domestic and European caselaw has arisen in respect of this point which until recently has failed to provide much clarity.

 In the 2004 case of Canada Life Limited v Gray the EAT had decided that a worker need not take or even request leave in order to be entitled to holiday pay. This position has been further complicated where the worker is on long term sick leave.

 A recent European Court of Justice decision (Perada v Madrid Movillad SA) has suggested that workers who are unwilling to take paid holiday during sick leave will be able to carry it over to the next leave year. However the WTR do not expressly allow for such a carry over which had led to confusion about whether this principal applied in the UK. The recent domestic EAT case of Fraser v South West London St George’s Mental Health Trust, has provided some welcome clarity. Mrs Fraser was on long term sick leave and following her dismissal, her employer paid her in lieu of her final year’s statutory holiday entitlement but did not do so for the previous two years of sickness absence. Although it was recognised that she had accrued her right to leave throughout her absence period, she failed to give notice to exercise her right under the WTR and therefore her right to pay expired at the end of each leave year of absence.

 The EAT decided that it was not right for workers to receive holiday pay where they had not taken holiday. The EAT clarified that a sick worker can either take leave during their period of sickness absence or give notice to their employer that they wish to defer their holiday to the next leave year. Therefore if a worker, such as Mrs Fraser fails to request that her holiday is deferred, holiday may only be taken in the leave year in respect of which it is due.

 Although the EAT have given some valuable guidance on this area, it does remain complex. Clarity is awaited on the question of whether sick workers must actively request carry-over and also on whether workers on long term sick who continue to accrue holiday and carry it over into a new leave year can do so indefinitely.

 For further information please contact Jane Sinnamon at jane.sinnamon@collingwoodlegal.com or on 0191 282 2884.

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *