Holiday Entitlement and Sickness Absence

Would you recognise an employee’s full entitlement to holiday pay if they had been away from work continuously on sick leave for say, two years?

Employers have faced uncertain times in recent years when deciding how to implement their annual leave policies.

The House of Lords decided in 2009 in the case of Stringer, following directions from the Court of Justice of the European Union (“CJEU”), to allow workers on long-term sick leave to take, and be paid in respect of, their statutory holiday entitlement. The House of Lords also ruled that a claim for unpaid statutory holiday pay could be presented as a claim of unlawful deductions of wages.

This Judgment had wide ranging implications as it potentially enabled workers to claim unpaid holiday pay dating back several years, whereas, previously, a workers holiday entitlement could not be carried forward from year-to-year on a “use it or lose it” basis.

The Judgment of Stringer did leave unanswered questions however, such as whether an employee on long-term sick leave must request holiday entitlement before becoming entitled to pay for that period.

The recent case of Fraser v South West London St George’s Mental Health Trust (2011) assisted employers in this respect. The employee in this case had been involved in an accident at work and had taken a number of year’s sick leave.  Upon termination of her employment her employer paid her holiday pay in respect of the final year, but nothing in respect of the previous two years when the employee had been substantially away from work on sick leave.

The Employment Appeal Tribunal (“EAT”) found that as the employee had not requested the leave in the two years in question she had not triggered the entitlement to be paid for it by giving notice, thereby confirming the ordinary rule of “use it or lose it”.

Unfortunately for employers this is not the end of the story. Further recent comments in the CJEU have cast doubt on the Judgment of Fraser, particularly the opinion of the Advocate General who expressed that the entitlement to paid holiday cannot be undermined by imposing conditions on employees that are difficult to meet. So have the EAT gone too far?

It is certain that there will be further litigation on this subject in the forthcoming months so if you require advice on how to implement your annual leave policy, or indeed wish to draft a new policy in light of these recent decisions, please contact our team of employment law experts.

Ben McFeely

Employment Solicitor

MKB Solicitors LLP

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