How do you deal with the issue of holiday entitlement during periods of long term sickness absence? This is a grey area and employers are often unsure of an employee’s rights. However, a number of recent cases have shed some light on this difficult area.
The ECJ in Pereda v Madrid Movilidad SA held that employees on long term sick leave can either take their holiday entitlement whilst on sick leave, or ask to carry it over to the next leave year so that it can be taken on their return to work.
Now, the EAT in the case of Fraser v South West London St George’s Mental Health Trust has held that an employee on long term sick leave must make a formal request to carry over untaken holiday to the next leave year.
The facts
Mrs Fraser, a nurse with the Trust, was on long term sick leave from November 2005 until her dismissal in October 2008. On termination of her employment, Mrs Fraser’s employer made a payment to her in lieu of her accrued holiday entitlement for her final leave year only. Believing that she was entitled to payment for holiday accrued over the full period of her absence, Mrs Fraser lodged a claim in the employment tribunal for outstanding holiday pay.
Mrs Fraser’s employer argued that under Regulation 15 of the Working Time Regulations 1998, she was required to give notice of her intention to exercise her right to statutory holiday which she did not do. Therefore, her holiday entitlement expired at the end of each leave year, as did her right to be paid in respect of that holiday.
The tribunal’s decision
The EAT agreed with the decision in Pereda in that Mrs Fraser had a choice, either to request to take her holiday during her period of sick leave, or request for her entitlement to be deferred to the next leave year. As she did neither, the EAT held that under the Regulations her entitlement had lapsed at the end of each leave year.
Interestingly, the EAT did not impose any obligation on the Trust as Mrs Fraser’s employer to alert her to the requirement to give notice. Mrs Fraser had tried to argue that if she was required to give notice of her intention to take holiday, then her employer was in breach of contract for failing to tell her that this was the case. The EAT rejected her argument, stating that the right to statutory holiday was one of general law and not of contract.
A case on similar facts has been appealed to the Court of Appeal and will be heard in early in 2012.
Notice to carry over
So what if an employee on long term sick leave is permitted to carry over his holiday entitlement to the next leave year (by giving notice or otherwise)? In the case of absences spanning several leave years, for just how long does holiday continue to accrue? This question was referred to the European Court of Justice (ECJ) in the case of KHS AG v Schulte and employers will no doubt be relieved to hear that the response was not “indefinitely”.
In this case, Mr Schulte was on long term sick leave from 2002 until the termination of his employment in 2008. The terms of his employment stated that in the case of long term sickness absence, any holiday not taken in the 15 months after the leave year in which it accrued would be lost. His employers argued, therefore, that any holiday entitlement Mr Schulte had accrued in 2006 had expired. The ECJ agreed and held the 15 months in this case to be lawful and that employees should not accrue holiday indefinitely.
Special Offer
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