Limiting carry forward of annual leave for employees on long term sick

Summary

In a recent case, Plumb v Duncan Print Group Limited, the Employment Appeal Tribunal (EAT) has given some helpful clarification on the carry forward of annual leave. In essence the EAT held that:

  • employees on long term sick leave may not carry forward untaken annual leave indefinitely;
  • a carry forward limit of 18 months from the end of the leave year in which the leave is accrued should be read into the Working Time Regulations 1998 (WTR); and
  • an employee on long term sick leave may carry forward unused annual leave without having to show that they could not take the leave in the current leave year. It is simply enough that they did not take it.


Background

Generally annual leave cannot be carried forward from one year to the next and therefore any unused leave is simply forfeited. However, as a result of a number of cases, words have been interpreted into the WTR so that there is an exception to this rule where the individual has been absent from work on long term sick leave.

Facts

In this case, the Claimant was on sick leave from April 2010 up to the termination of his employment in February 2014. While he was off sick, he did in fact take some holiday but chose not to take it all. When he left, he was paid in respect of accrued holiday for the holiday year 2013/14, but not for the three previous years. He claimed that, as he had been on long term sick leave, he was entitled to the previous years’ holiday as well, as it had been carried forward.

Decision and Implications

The EAT held that Mr Plumb’s unused holiday could carry forward from one holiday year to the next even though he was not prevented from taking it in the relevant holiday year in which it accrued. However, it also said that unused holiday can only be carried forward up to 18 months from the end of the leave year in which it was accrued.

The EAT said that Regulation 13(9) of the WTR should be amended to read:

"Leave to which a worker is entitled under this regulation may be taken in instalments but - (a) it may only be taken in the leave year in respect of which it is due, save that it may be taken within 18 months of the end of that year where the worker was unable or unwilling to take it because he was on sick leave and as a consequence did not exercise his right to annual leave."

In addition to the holiday Mr Plumb had been paid on leaving, he was therefore also entitled to be paid for accrued holiday from the holiday year 2012/13, but not for previous years. Holiday from the 2010/11 and 2011/12 holiday years was forfeited.

The European courts had already established that, for the purposes of the Working Time Directive (from which the WTR are derived), a carry forward limit of 15 months is acceptable. However, until this case, the UK courts had not addressed what the appropriate limit should be for the purposes of the WTR. The case provides clarification in this regard and will therefore be welcomed by employers.

The 18 month limit referred to in the case will apply as a default position where the employment contract is silent on the length of time holiday can be carried forward. This leaves open the possibility of employers imposing shorter carry forward periods in their employment contracts. However, following existing European case law, the period should ideally be no shorter than 15 months.

It should also be noted that this decision relates to the 20 days’ annual leave provided under the Working Time Directive and not the additional 8 days’ annual leave provided under the WTR or any additional contractual leave. Carry over for these additional days leave is not a legal requirement and will be determined by the terms of the agreement between the employee and employer.

Permission to appeal the decision has been given to the parties and therefore this may not be the final word on the point. Watch this space.

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