Employees who are dismissed whilst on long term sick leave do not need to request 'carry-over' of untaken holiday in order to receive a payment in lieu of such holiday.

Mrs Larner was on sick leave from January 2009 until NHS Leeds terminated her employment in April 2010. Mrs Larner then claimed payment for the statutory holiday that she had been unable to take due to her sick leave. She had not advised her employer during her sick leave that she wanted to take her holiday or that she wanted to carry-over the holiday to the next holiday year. The Employment Tribunal and the Employment Appeal Tribunal ("EAT") agreed with Mrs Larner and the Court of Appeal has now upheld her claim.

The decision is at odds with the exact drafting of the Working Time Regulation 1998 (the "Regulations") and the EAT's decision in Mrs Fraser v South West London. Both state that an employee must make a request to carry-over their holiday entitlement from one holiday year to another. The Court of Appeal disagreed and confirmed that an employee (and worker) did not need to request the right to take his holiday if he was 'unable or unwilling to take it because he was on sick leave'.

The Court of Appeal stated that their decision applied to private sector as well as public sector employees.


The Court of Appeal noted that 'the unfolding law on paid annual leave is not in a completed state'. It is unclear if the decision in Mrs Larner's case would apply had she not been on sick leave at the time of her dismissal. In a conflicting case, Mrs Fraser had returned to work for almost a year before her employment was terminated and the EAT commented that she did have an opportunity to take, or request that she be allowed to take, her holiday leave during that period.

What happens if an employee has been on sick leave for many years and his employment is then terminated? Is he entitled to accrued holiday during his entire sickness absence? The European Court of Justice's ("ECJ") 2011 decision in Shulte confirmed that carry-over of holiday does not continue indefinitely. The ECJ suggested a maximum 15 month carry-over period was appropriate in the Shulte case.


NHS Leeds v Larner

Fraser v South West London St George's Mental Health Trust

KHS AG v Schulte

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