Employees unable to take statutory holiday because of sickness absence are entitled to carry it forward regardless of whether this has been specifically requested.

Overview

The Court of Appeal has handed down its Judgment in Larner v NHS Leeds. As a result, employees who are unable to take their statutory annual leave due to sickness must now be allowed to take such leave at another time or alternatively carry the leave forward to the next holiday year without having to make such request in advance. Payment in lieu on termination for untaken leave must also now include such carried forward untaken leave. This right applies equally to private and public sector employees.

Facts

The Appellant, NHS Leeds, employed the Respondent, Mrs Larner, as a clerical officer from 2000-2010. Mrs Larner was absent on sick leave for the whole of 2009/10. She did not take any of her paid statutory annual leave during this time and did not submit a request for it to be carried forward to 2010/11. Mrs Larner's employment was terminated in April 2010, on grounds of incompatibility due to her continuing ill health, and her notice included the standard wording that "a payment would be made in respect of any outstanding leave". NHS Leeds refused to pay her for the untaken leave for the year 2009/10.

Mrs Larner's claim is based on her entitlement to paid annual leave under Article 7 of the Working Time Directive which was, implemented by the UK Working Time Regulations 1998 (WTR).

NHS Leeds argued that there is a legal requirement for a person on sick leave to make a request to their employer if they wish to carry forward their entitlement to annual leave from one year to another. If this request isn't made then the option is lost.

Decision

All three judges upheld the Employment Tribunal (ET) and Employment Appeal Tribunal's (EAT) findings that Mrs Larner was entitled to annual paid leave accrued during her sick leave and that she was entitled to carry this forward to the next leave year without making a prior request to do so. Further she was entitled on termination of her employment to be paid in lieu for the annual leave she had been prevented from taking.

This decision has clarified the right of 'carry over' and put an end to the inconsistency between the two EAT decisions of Larner and Fraser v Southwest London St George's Mental Health Trust (Fraser), where it was decided that an employee had to ask for leave in order for annual leave rights to be triggered. Fraser has now been distinguished on its facts that, unlike in Larner, Mrs Fraser had the opportunity to take the unused leave on her return to work. Consequently it is considered that Mrs Fraser was required to provide notice in order to take annual leave.

Comment

Clarity on the issue of notice requirements and payment in lieu on termination is a significant development for both employers and employees. The decision will lead to additional expense for employers who have previously followed the Fraser decision in dealing with carrying forward holiday that isn't taken due to sickness.

The Court of Appeal did not decide whether the carry-forward rights apply just to the 4 week entitlement under the Directive or whether the rights apply to all of the 5.6 week entitlement under the WTR. They also did not address the question of whether time limits can be imposed before carried-forward leave is lost. These are areas likely to be covered in the Government's forthcoming 'Modern Workplaces' reform.

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