08 July 2015

The recent Employment Appeal Tribunal (“EAT”) decision in the case of Plumb v Duncan Print Group is an another holiday pay decision, but not this time in relation to the issue of overtime, commission and the calculation of holiday pay.

It has been settled for some years that employees may be able to carry forward part of their annual leave entitlement to the next holiday year, at least in respect of the 4 weeks per annum “basic leave” if they were unable to take this holiday in the correct holiday year due to illness or injury.

The employer in this case argued that if an employee is on long term sick, and could, physically, take leave and go on holiday, then no “carry forward” applies. The EAT disagreed and held that if the employee is on sick leave, they can choose not to take their statutory annual leave, even if they are physically able to take it, and that leave will carry forward to the next holiday year if not able to be taken in the correct year.

The EAT concluded that the principle was that the Regulations should read as permitting a worker to take annual leave where the worker was “unable or unwilling to take annual leave because he was on sick leave and, as a consequence, did not exercise his right to annual leave”.

The EAT also considered the issue of whether an employee on long term sick could accumulate holidays over several years, and be entitled to be paid in lieu of all these holidays upon the termination of employment.

Having considered the relevant European authorities the EAT held that holidays must be taken within 18 months of the end of the leave year in which they accrued, otherwise they would lapse and could no longer be taken. The “18 month” figure was not taken from any policy or contract that applied to the employee, nor the Regulations, but the EAT concluded that this was the appropriate period of time.

Employers cannot insist that employees take holidays while off sick and it is the employee’s decision whether to take the holiday, or potentially carry the entitlement over to the next holiday year. Employers are well advised not to simply let employees be absent for years on end, and to take active steps to investigate the position, try to support the employee in returning to work, and if necessary (and following a fair process) make the proper arrangements for termination of employment. Legal advice should be sought in order to avoid the numerous pitfalls.