Our thoughts on the world of employment law - and beyond.

Back to work – time to update your holiday policy

This summer the EAT, in the case of Plumb v Duncan Print Group Ltd, provided useful clarification in relation to carry-over of holiday for workers on long term sickness absence. Given the evolving nature of the case law in this area, the parties were given leave to appeal to the Court of Appeal, however we now understand that the parties have not appealed this decision allowing employers to rely on the principles set out by the EAT.

In this case, Mr Plumb was on sick leave for nearly four years when his employment terminated. About five months before his employment ended he asked to take all the holiday he had accrued since the start of his sick leave. His employer agreed to pay for accrued but untaken holiday for the current leave year but not for unused holiday for the previous three leave years. Following termination of his employment, Mr Plumb submitted a claim for payment in lieu of untaken holiday for those previous three leave years.

Previously, the Court of Appeal in the case of NHS Leeds v Larner had established that the Working Time Regulations (WTR) should be read to include a right for a worker to be paid in lieu of accrued but untaken annual leave where they had been unable or unwilling to take it because they were on sick leave. However, whilst we knew from EU case law that the right to carry over annual leave was not unlimited, it was not clear what the cut-off point would be. In its judgment, the EAT in Plumb provided much needed clarification in relation to this area of the law as follows:

  1. A worker on sick leave does not need to provide evidence that they are physically unable to take annual leave in order to carry over accrued but not taken statutory holiday to the following leave year. Sick leave is meant to help a worker recover from illness, whereas holiday is meant to enable a worker to rest for reasons of health and safety. It is enough that the worker chooses not to take holiday during the period of sick leave.
  2. The WTR should be read so as to allow sick workers to carry over unused holiday for 18 months after the end of the relevant leave year.

This decision clarifies the circumstances in which a sick worker can carry over accrued but untaken holiday and, crucially, that accrued holiday that goes beyond the 18 month cut-off period will lapse. For employers previously concerned about the potential for sick workers to claim for years of accrued holiday, this is a welcome development. Now that we have clarity on this, it would be sensible for employers to update their holiday and sickness policies to make the position clear to employees.

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