Accrual of Annual Leave during Long-term Sickness Absence

July 27, 2015

It has long been established that workers on long term sick leave may carry forward holidays which have accrued during their absence to the following leave year. This has led to a number of issues for employers when seeking to manage employees’ annual leave entitlement, particularly where there have been very long periods of sickness absence.

The Employment Appeal Tribunal (EAT) in England & Wales has recently addressed the extent to which holidays accrued during long-term sickness absence can be carried over in the case of Plumb v Duncan Print Group Ltd. The EAT held that workers on long-term sick leave are entitled to carry forward the four weeks’ leave provided for under the EU Working Time Directive, but that they must take it within 18 months of the end of the leave year in which it accrued. The EAT also held that workers are not required to show that they were unable to take the annual leave by reason of their sickness in order to carry it forward.

Case Summary

Mr Plumb had been off work due to sickness from April 2010 following an accident at work. He hadn’t taken or requested any paid annual leave for the 2010, 2011 and 2012 leave years until July 2013 when he asked to take all annual leave accrued since 2010. His employer only agreed to grant paid annual leave for the year in which it was requested and refused to pay for untaken leave in 2010, 2011 and 2012. Mr Plumb did not return to work and his employment was eventually terminated in February 2014. He subsequently brought a claim for payment in lieu of the untaken annual leave which had accrued from 2010 to 2012.

The claim only considered the four weeks’ leave provided for under the EU Working Time Directive, and not the additional 1.6 weeks provided for under the Working Time Regulations as it has
previously been established by the EAT that there is no entitlement for this additional leave to carry forward.

European case law has previously established that there is a limit to the length of time an employee on long-term sick leave can continue to carry over untaken annual leave under the Directive. In the case of Schulte, the European Court of Justice held that the carry over period should be significantly longer than the leave year and held that 15 months in that case was not contrary to the Directive. However it did not clarify if this should be regarded as a minimum or if it was only viewed as an appropriate time limit based on the facts of that case.

Mr Plumb accepted that the EU case law allowed for the imposition of time limits on the length of time for which leave can be carried over, but he argued that as no limit has been provided for in UK legislation or set out in his contract of employment, the carry-over period in his case was unlimited.
The EAT disagreed and held that the wording of the Working Time Directive and EU case law  provided that untaken holiday cannot be carried forward indefinitely and therefore a time-limit should be read into the Regulations. The EAT held that the carry-over period should be limited to 18 months after the end of the holiday year in question.

The EAT therefore concluded that Mr Plumb was entitled to pay in lieu of annual leave for 2012 but not for 2010 or 2011. It should be noted that both parties have been given leave to appeal to the Court of Appeal, however, it remains to be seen whether this will be pursued.

Impact on Employers

While not directly binding on NI industrial tribunals, this decision is likely to be persuasive and should be regarded as useful guidance to NI employers.

This case provides welcome clarity for employers that leave accrued by workers on long-term sick leave can only be carried forward for up to 18 months after the end of the leave year in which the
holidays accrued. It should be noted that the decision is only applicable to the 4 weeks’ paid statutory holiday as required by the Working Time Directive and that any right to carry forward any additional holiday entitlement will be determined by the worker’s contractual terms.

Although the case may be appealed, employers should consider reviewing their contracts of employment and sickness absence policies and procedures. It may be feasible for employers to agree shorter contractual carry-over periods, however due to European case law it is likely that this would be limited to a 12 month period.

 

Michael Black
Director
t: 028 9027 1312
e: m.black@cfrlaw.co.uk

 

Aisling Byrne
Associate
t: 028 9027 1360
e: a.byrne@cfrlaw.co.uk

 

Jonathan Simpson
Solicitor
t: 028 9027 1304
e: j.simpson@cfrlaw.co.uk