Paid Holiday for Workers on Long-Term Sick Leave

July 22, 2013

Paid Holiday for Workers on Long-Term Sick Leave

The Court of Appeal has confirmed that the entitlement to paid annual leave of a worker who is absent for a whole year owing to sickness does not depend on that person submitting a request for the leave before the end of the relevant pay year (NHS Leeds v Larner).

Mrs Larner was absent from work due to ill health for the whole of the year 2009/2010. Her holiday year ran from 1 April to 31 March. She received sick pay at the rate of full pay for the first six months of her absence and half pay for a further six months. When she went off on sick leave, she had not booked any annual holiday and did not make any requests to do so during 2009/2010.

On 6 April 2010, Mrs Larner was dismissed by NHS Leeds on grounds of incapability owing to ill health. Her employer refused any payment in lieu for her 28 days’ untaken annual leave because her contract required that a written request be made if an employee wished to carry forward leave from one year to the next and she had failed to do this.

Mrs Larner claimed that she had the right under Article 7 of the EC Working Time Directive (WTD), and under the Working Time Regulations 1998 (WTR) which implement the Directive into national law, to carry forward to 2010/2011 the paid annual leave accrued but not taken, without the need to make a prior request. The Employment Tribunal (ET) upheld her claim. NHS Leeds appealed to the Employment Appeal Tribunal (EAT) and lost.

The EAT had made reference to Stringer v HM Revenue and Customs, in which the European Court of Justice (ECJ) ruled that leave entitlement does accrue during a period of sickness absence. The issue in this case was whether Mrs Larner had forfeited her entitlement because she had not submitted a request to carry it forward. On this point, the EAT relied on the ECJ’s decision in Pereda v Madrid Movilidad SA that the right to paid annual leave is not extinguished where a worker is on sick leave for the whole or part of the leave year and does not have the ‘opportunity to exercise that right’.

Mrs Larner was signed off sick for the whole of the pay year 2009/2010 so did not have the opportunity to take her annual leave entitlement. The EAT held that the right to carry forward annual leave in such circumstances does not depend on formal notice being given and Mrs Larner’s right to be paid in lieu for her untaken leave ‘crystallised’ on the termination of her employment.

The Court of Appeal has now upheld the EAT’s decision. In doing so, the Court commented that the law on paid annual leave is still unfolding. It referred to the most recent decision of the ECJ in Georg Neidel v Stadt Frankfurt am Main, which reinforces Mrs Larner’s claim that Article 7 of the WTD does not impose any requirement to make a prior leave request. If, as in this case, a worker has not recovered or returned from sick leave and therefore had no opportunity to take that leave at another time, the service of a notice for a period which is not sick leave is not practically possible.

In addition, since the ET and the EAT gave their judgments, the ECJ has ruled that Article 7 has direct effect. Mrs Larner was therefore entitled to enforce directly the rights conferred by Article 7 against NHS Leeds as an ‘emanation of the state’. However, in the Court’s view, the WTR could also be construed to conform with the WTD in a case concerning a private sector employer.