The debate about the carrying over of untaken holiday leave in the event of sickness absence has rumbled on for some time now and matters appear to have reached an unwelcome climax for employers with the recent Court of Appeal decision in NHS Leeds v Larner. 

The debate about the carrying over of untaken holiday leave in the event of sickness absence has rumbled on for some time now and matters appear to have reached an unwelcome climax for employers with the recent Court of Appeal decision in NHS Leeds v Larner. 

The worker, Mrs Larner, was unable to take holiday for a complete leave year due to illness. When her employment was terminated the following year, the NHS Trust she worked for refused to pay her in lieu on termination for the annual leave she had not taken in the previous leave year because she had not made a request to take the leave or to carry it over.

The Court of Appeal rejected the employer’s stance and held:

• If a worker is unable or unwilling to take leave owing to sickness, they must be allowed, if they wish, to take it at another time (and if necessary in a later leave year);
• It is not a requirement of the Working Time Directive that a worker must make a request to take or carry forward annual leave;
• Leave left untaken at the end of a leave year because an employee was unable to take it due to ill health will automatically carry-over to the future leave year regardless of whether they have asked to take it or not;
• If the employment is terminated before an employee has had the opportunity to take that carried-over leave they are nevertheless entitled to receive it via a payment in lieu upon termination;

The Court of Appeal also found that the above position applies regardless of whether a worker is employed by a public or private employer. The Court of Appeal declined to decide the position in relation to the additional 1.6 week period of statutory annual leave provided for in the Working Time Regulations (which is over and above the minimum 4 weeks required by the Working Time Directive) on the basis that this was a new point only introduced at the appeal stage. However, a recent Court of Justice decision strongly suggests that the principle here will not extend to the additional 1.6 weeks leave.

The decision in NHS Leeds v Larner will no doubt be a blow to employers, particularly those who have struggled to cover sickness absence in the first place and are then faced with paying out a potentially considerable sum in lieu of holiday leave which has been carried over from previous years on termination. However, even with this latest decision, it is probably safe to say we haven’t heard the last on this contentious issue...

Contact: Debbie Moore

Phone: undefined