July 10, 2015

Unused annual leave due to sickness can be carried forward up to 18 months

Workers on long-term sick leave are entitled to carry forward untaken holiday up to 18 months after the end of the leave year in which that holiday accrued.

This was the decision of the Employment Appeal Tribunal (EAT) in Plumb v Duncan Print Group Limited . The EAT also confirmed that to carry forward holiday, the worker doesn't need to show that they were physically "unable" by reason of sickness to take the holiday during the leave year in which they were off sick.

What happened in this case?

Mr Plumb had been on sick leave from his employment with DPG Limited since April 2010 due to an accident at work. He did not take paid annual leave for the 2010, 2011 and 2012 leave years. In July 2013 he asked to take all the annual leave he had accrued since 2010. His employer only paid him his leave for the year in which he requested it (i.e. 2013/14) and refused to pay up for untaken leave in 2010, 2011 and 2012 (60 days). He remained on sick leave until termination of his employment in February 2014 when he brought a claim for untaken accrued holiday from 2010 to 2012.

Although UK law specifically provides that annual leave must be taken in the year in which it is due and cannot be carried forward, case law has established an exception to this rule where a person is on sick leave and is unable or unwilling to take annual leave during the leave year.

It transpired in evidence before the Employment Tribunal that between 2010 and 2011, Mr Plumb had been diagnosed as severally depressed but he continued to work at B&Q for 12 hours on weekends and took a week's holiday in the UK in 2012. The Tribunal therefore concluded that he was "able" to take his annual leave during his leave years, so his claim was rejected.

The EAT said the Tribunal had misinterpreted the law. A worker who is on sick leave does not have to demonstrate they are physically unable to take holiday by reason of their medical condition.  Since Mr Plumb had not asked to take annual leave while off sick, it had to be assumed he did not wish to do so, so he was entitled to carry over.

However, the EAT said that the wording of the Working Time Directive and EU case law provided that untaken holiday cannot be carried forward indefinitely and should be limited to 18 months after the end of the holiday year in question

The EAT concluded that Mr Plumb was entitled to pay in lieu of annual leave for 2012 but not for 2010 or 2011. Interestingly, Mr Plumb's employers were ordered to pay Mr Plumb's appeal fees of £1515 even though his claim was only partially successful.

What this case means for employers

It is well established that workers on long term sick leave may carry forward to the next holiday year any untaken holidays which have accrued during their time off sick.  They may request to take the holiday during the time they are off sick (unless their contract prohibits this – although this is unusual).  But if they are unable, or simply do not do so, this case makes clear that the leave can be carried forward for up to 18 months after the end of the leave year in which the holidays accrued.

This decision will be a comfort to employers concerned that workers who have been absent from work for a number of years may be entitled to back pay for holidays accrued over the entire period.  It effectively stops the clock so that if a worker fails to put in their request for accrued but untaken holiday within 18 months of the end of the holiday year in which they were off sick, the holiday will be lost.   Note that the decision is only applicable to the 4 weeks (20 days') paid statutory holiday as required by EU law - the right to carry forward any additional holiday entitlement will be determined by terms of the worker's employment.

Both parties have been given permission to appeal to the Court of Appeal so this may not be the end of the matter.  In the meantime, however, employers are entitled to insist that requests for accrued holiday pay made outside this time frame can be refused.