Clarity on Holiday Accrual During Sick Leave

September.23.2015

​We have had lots of news for you this past year on holiday pay and how to calculate it, following various mind bending judgments on the topic. The good news is that finally we have a judgment that gives us some clarity in one area. It is a small area but we should rejoice nonetheless.

Mr. Plumb was off sick (after being hit with some lead piping… no we made that bit up) from April 2010, for almost 4 years before his employment was terminated. The question on termination therefore was whether he was entitled to be paid for holiday that he had accrued during those four years and not been able to take. He had not asked for or taken any holiday in the first three years and in the final year of his illness, he had asked for some holiday but it was refused.

His employer decided that it was reasonable to pay him for the one year of untaken holiday accrued prior to the end of his employment but not for the other three years. Mr. P brought a claim.

The Employment Tribunal held that he was not entitled to the additional three years’ holiday pay because he could not prove that he was physically unable to take the holiday. I suspect in reality it would be quite hard for anyone to prove they were physically unable to take holiday, given that not all of our holidays have to be preceded by a flight to the Caribbean and some of us take holiday and just sit at home…. So that meant that the question of accrued holiday had been fixed. You cannot prove you were too ill to take it, so you don’t get to keep it - right?

Not quite – the Employment Appeal Tribunal (EAT) disagreed and held that it is not necessary to prove that you were too ill to take holiday. It held that EU case law recognises that you can take annual leave when sick – you just cannot be forced to. The EAT reminded themselves that annual leave is a health and safety measure and therefore should be for rest and relaxation, so if a sick employee does not want to take holiday, he should not be made to do so. The EAT concluded that Mr. P had not requested any holiday until 2013, so he was entitled to take all the leave that had accrued prior to 2013 at a later date, subject to any limitation on carrying over leave to later years.

So then the EAT had to grapple with the question of whether there is any limit on carry-over of holiday from one year to the next and here is where we grasp, with clammy hands, our longed for tiny piece of clarity. The EAT held that Mr. P was not entitled to be paid in lieu of accrued holiday for the earlier two of the three holiday years in question because he had lost the right to take that holiday.

It did this by reference to the Working Time Directive and the fact that it expressly provides that account should be taken of the International Labour Organisation (ILO) principles, which recognise that leave must not accrue indefinitely, but must be taken within 18 months of the end of the year to which it relates. Who knew?!

So what can we learn from this? Of course nothing is ever certain in this area and decisions will always be subject to individual circumstances but it is certainly worth limiting (in the contract of employment) the amount of holiday that can accrue when an employee is on sick leave. Arguably given the ILO Convention principles, limiting this to a year would work, but in the absence of that, it seems that 18 months is now a reasonably reliable cut off point.