The question of what happens to holiday when an employee is off sick is separate, but related, to the question of what happens when an employee is off sick when on holiday. However, there have been recent developments in this area too.
We have known for some time that employees continue to accrue holiday during periods of long-term sickness absence. It was also recently established in the case of Stringer that employees can take holiday during a period of sickness absence if they wish.
However, it had always been questionable whether an employee on long-term sickness absence could carry forward their unused holiday to the next leave year. This was dealt with by the European Court of Justice in the Pereda case. In that case, despite the fact that there is nothing in the Working Time Directive dealing with carry forward of leave, the Court decided that workers can choose not to take their holiday when they are off sick, and can then carry forward that leave if their absence means they would otherwise lose it, and even if the employer’s rules do not allow this. The Pereda decision does only relate to the employee’s statutory entitlement to annual leave and not to any extra holiday given by the employer under their contract of employment.
This did make it seem that employees hold all the cards when it comes to holiday. However, a recent recent UK decision is better news for employers.
Unfortunately, the decision is only at Employment Tribunal level, and therefore other Tribunals are not legally bound to follow it. In the case of Khan v Martin McColl, where the Tribunal said that an employee would only be allowed to carry forward their leave if they had requested to take it and the request had been refused.
The other important issue in the Khan case relates to the payment for accrued leave on termination of employment. Where an employee’s absence covers more than one leave year, but the employer does not make payment for their accrued leave for the whole period, they have previously been able to claim their accrued holiday for the entire period of absence as a “series of deductions” from their wages. In Khan, the employer had made a payment for the accrued holiday in the final leave year, but not for previous years. The Tribunal found that this broke the “series of deductions” and this prevented the employee from claiming the holiday from the previous leave years.
This may therefore be a strategy employers may wish to use when dealing with employees who are being dismissed and have more than one year’s worth of leave entitlement. However, as the law in this area is still in a state of change, please let us know if you are dealing with a situation like this and we can advise further.
If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected])