Accrued Holiday whilst on long-term Sick Leave

Accrued Holiday whilst on long-term Sick Leave – Use it or Lose it

For a long time the UK was out of sync with the EU on a worker’s right, whilst on long term sickness absence, to carry over accrued but untaken annual leave entitlement indefinitely. However, last year the EAT’s decision in Plumb v Duncan Print Group Ltd was good news for employers as it tightened the limits on holiday accrual during sick leave.

Mr Plumb had been off on sickness absence from April 2010 until the termination of his employment in February 2014 as a result of an accident. For the leave years of 2010, 2011 and 2012 Mr Plumb did not take or ask to take any annual leave. In August 2013 he requested to take the leave accrued from the previous three years. Whilst his employer agreed to pay for his annual leave for the 2013 holiday leave year, they refused for the previous years. When Mr Plumb’s employment terminated in February 2014 he brought a claim seeking payment in lieu of the untaken holiday for the years of 2010 to 2012.

Mr Plumb lost at the Employment Tribunal as he could not prove that he was physically unable to take the holiday during his period of sick leave. Mr Plumb appealed this decision to the Employment Appeal Tribunal where the two following issues were considered:

  1. Is an employee on sick leave required to establish that he was unable to take annual leave whilst on sick leave or is it sufficient for him to choose not to take annual leave?
  2. Is there a limitation period on carry over of accrued annual leave?

On the first issue, the EAT held that the Employment Tribunal was incorrect to hold that Mr Plumb had to show he was unable to take the annual leave. The fact that he was unwilling to take the leave was sufficient. Whilst an employee can take holiday on sick leave, they cannot be forced to do so. If the employee chooses not to, then the untaken holiday is in principle carried forward until he does.

However, on considering the second issue, the EAT curtailed the employee’s right to carry forward the untaken holiday indefinitely. In its judgement, the EAT noted that the origin of the Working Time Directive’s minimum holiday obligation lay in the protection of employees’ health and safety, in that annual leave allows a worker to rest/recuperate. However, the EAT held that there has to be a point at which the holiday is so far delayed after the time it was accrued that it could no longer realistically have any beneficial health and safety impact. On that basis, the EAT held that any unused holiday must be taken within 18 months of the end of the leave year to which it relates.

This decision brings the UK’s stance on the matter in line with other EU countries’ interpretation of the EU law in this area. It is thought likely, however, that it would be possible for employers to provide a lesser period contractually and similar case law has suggested 15 months.

It should be noted that this decision is only applicable to the four weeks paid statutory holiday as required under EU law, any additional holiday entitlement will be determined by the terms of the worker’s employment. 

As well as putting welcome stop to unlimited back claims for untaken leave, this case should also be used as a reminder of the importance of effectively managing long-term sickness absence before such matters come to fore. 

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