Carrying over holiday accrued while off sick- court guidance

31st July 2015 The subject of holiday entitlement, and the complications caused if the employee is actually sick over the holiday period, are areas of employment law that have seen significant developments recently. There is little doubt that this is a matter of great importance to employees, as they do not wish to feel that they have lost their holiday rights because of being ill. From the view of employers the concerns are practical and financial- they need to know how much holiday each employee is entitled to take (so that they can plan staffing requirements properly), and they also need to know how much holiday pay each employee is entitled to (particularly if it is being claimed that they can carry it over into the next holiday year). The courts and Tribunals are required to determine the appropriate rights by reference to the UK's Working Time Regulations 1998, but in such way as is correct under European Law set out in the relevant EU Directive. However, the practical concerns are the ones which cause headaches for all those involved in dealing with this subject, in particular dealing with questions such as "does the employee have to provide evidence that they were ill at the relevant time? " and "how far forward can the holiday entitlement be carried?"$0$0$0$0The Employment Appeals Tribunal (EAT) has gone some way to giving guidance on answering a couple of the most important questions in this debate, in the case of Plumb v Duncan Print Group Limited.$0$0$0$0$0Mr Plumb was employed as a printer. Sadly he was involved in an accident. The consequence was that Mr Plumb took 4 years off work, on sickness absence, commencing in April 2010. In that period he did not take nor ask for holiday until July 2013.He then wrote to his employer saying that he wished to take holiday that he had not taken since 2010. His employer granted the request in respect of the holiday entitlement for 2013/14, but not for the previous years of 2010, 2011, and 2012. Following the termination of Mr Plumbs employment he brought a claim for payment of his accrued untaken holiday for the years 2010 to 2012.  $0$0$0$0$0The Employment Tribunal that heard the case took the view that the key issue was whether Mr Plumb had been unable to take his holiday in all those years because of sickness. The Employment Tribunal concluded that there was insufficient evidence of Mr Plumb being "unable" to take the leave in the years stated. Mr Plumb had given evidence of having had operations on his shoulder in 2010 and 2011(ie within the relevant period), and then being diagnosed with severe depression in 2012. However, the Employment Tribunal was of the view that he had not provided sufficient evidence to show that his illness had resulted in him being unable to take the holiday entitlement in that period, so his claim failed. Mr Plumb appealed against that decision.$0$0$0$0$0The argument that Mr Plumb raised at the EAT was that he was not required to establish that he was unable to take holiday by reason of his medical condition, and that in order to carry over that entitlement into the next year it was sufficient that he was absent on sick leave and that he did not choose to take annual leave during the relevant periods. The EAT noted that if an employee is unable to take their holiday leave in a set "holiday year", then they are entitled to take it in a subsequent "holiday year". It also noted that an employee does not have to prove that he/she was physically unable to take the holiday. The EAT also ruled that as Mr Plumb had done nothing to suggest that he wanted to take holiday while he was on sick leave, it had to be inferred that he did not wish to have holiday then and so he was entitled to carry over the holiday entitlement into the next holiday year.$0$0$0$0$0The next question to be addressed was whether or not Mr Plumb was entitled to carry over all the accrued holiday entitlement (ie carry it over indefinitely, or if there should be some limit to the time he can claim back for). it was accepted on behalf of Mr Plumb that the EU case law shows that limits can be placed on the limits of carrying forward holiday leave entitlement. However, he argued that where the contract of employment and the Working Time Regulations do not expressly limit the period of carry over, that it must therefore be unlimited! The EAT disagreed with this argument. The EAT noted that the Working Time Regulations require holiday to be taken in the year it is due. But the EAT then noted that the EU case law shows that the regulation must be interpreted to include an exception when a person is unable to take holiday due to illness. he Eat noted that the EU cases show that in most cases an 18 months limit at most of carry over is sufficient to meet the requirements of the EU Directive (as per the EU case of KHS AG v Schulte), and it took the view that this limit should be read into the UK's Working Time Regulations. Accordingly the EAT allowed the claim for payment in lieu of holiday pay for 2012, but not for 2010 or 2011. Permission however was granted for the case to be heard by the Court of Appeal.$0$0$0$0$0The practical solution for employers is to ensure that they address the case of any employee that has been off on long-term sickness absence- as this case illustrates the fact that they cannot simply be ignored because they are no longer getting paid. The next step is to ensure that employers have comprehensive details of holiday booked and taken, and flag up the issue with any employee that has been on long term absence (ie well before the hidden costs increases significantly).$0$0$0$0$0At Hallett Employment Law Services Ltd we can provide you with advice and assistance in dealing with these matters.$0