Do Employees accrue holidays whilst on sickness absence?

There has been significant interest in recent case law on whether employees on sick leave;

1. Continue to accrue statutory holiday whilst on sick leave;
2. Are entitled to take holidays while on sick leave;
3. Are entitled to carry over holidays which they have not taken it while on sick leave;
4. Are entitled to pay in lieu of holidays not taken but accrued from previous years and in the current year during periods when they could not take the holiday because they have been on sick leave.

This note explores those issues.

An employer must give every worker (not just employees) 5.6 weeks (28 days for a 5 day week worker) of paid annual leave per leave year (including holidays).

Part-time workers are also entitled to 5.6 weeks paid annual leave pro ratad to their working hours. For example, an employee working two days per week is entitled to 11 days. Employers can provide more holidays than the statutory minimum but not less.

Accrual of annual leave during a period of sick leave.

The European Court of Justice has decided that a worker on sick leave does accrue holiday entitlement.

Taking annual leave during a period of sick leave.

Employers must allow workers to take annual leave during a period of sick leave, if they wish to do so and pay them holiday pay (though not sick pay) for that period.

Annual leave which accrued during sick leave but not taken

If the worker returns to work during the same leave year, and can take his full holiday entitlement during the leave year, then he is entitled to do so, subject to the employer’s notification requirements. However, if the worker returns to work and cannot take his full holiday entitlement during the leave year, then, as the Working Time Regulations currently stand, the worker is not entitled to carry over any outstanding statutory annual leave, as the regulations prevent annual leave being carried over.

However, that position has been muddied following the ECJ’s decision in the case of Pereda v Madrid Movilidad. The ECJ ruled that a worker who is unable to, or does not wish to, take annual leave during sick leave must be allowed to take his holiday entitlement upon his return to work. This can be at a mutually convenient time for the worker and employer even if it means that the holiday entitlement is carried over into the next leave year.

A Leeds Employment Tribunal has recently followed Pereda notwithstanding the prohibition against ‘carry over’ in the UK Working Time Regulations.

Leave not taken while on sick leave – employment terminated

Employers must pay workers for all annual leave accrued but not taken, this is irrespective of the leave year in which it is accrued.

This is relatively uncomplicated if the untaken leave relates to the leave year in which the worker’s employment terminates. The position is more complicated in respect of previous years, if not all of the worker’s holiday entitlement was taken in those years. There have been three EAT decisions with the latest, Canada Life, seeking to reconcile the apparent conflicting decisions in the previous two. From Canada Life it is apparent that, irrespective of whether or not a worker has applied to take annual leave, the worker is entitled to that annual leave. A worker cannot claim for leave which has accrued but is untaken while remaining in employment, but can be upon termination of his employment. How far back such a claim can be made depends upon whether the worker can prove a ‘series’ of deductions.

Nicola Roe (0115 9863636 http://www.employmentlawhelp.co.uk) is an Employment Solicitor at Richard Nelson Solicitors. We are dedicated to providing advice of the highest quality to assist you in employment issues you may have. We understand that employment disputes can be stressful, whether you are an employee with a problem at work or an employer who is defending a claim. Our aim is to support you though the process and achieve the best possible outcome as quickly and cost effectively as possible.