Court of Appeal ruling on holiday entitlement
26 July 2012
An important ruling handed down by the Court of Appeal brings bad news for employers dealing with the holiday entitlement of employees on sick leave.
In NHS Leeds v Larner, the Court of Appeal held that employees on long-term sick leave will not lose their entitlement to holiday at the end of the leave year even if they have not given notice of their intention to take their holiday nor given notice of their intention to carry it over to the next leave year.
This decision (which relates to an employee’s entitlement to 4 weeks' holiday conferred by the Working Time Directive - not to any additional holiday) means that provided an employee is unable or unwilling to take their holiday because they are on sick leave:
- the employee must be allowed to take that holiday at another time, including carrying it over to a later leave year if necessary
- on termination of employment, compensation for untaken holiday, accrued in these circumstances, must include any untaken holiday from previous leave years.
The Government’s consultation on Modern Workplaces (published on 16 May 2011) proposed a number of changes to the annual leave provisions of the Working Time Regulations to bring them into line with ECJ case law in this area. We are still awaiting the Government’s response to the consultation, which was due earlier this year, but expect that it will be influenced by the Court of Appeal decision in Larner.
NHS Leeds v Mrs Janet Larner  EWCA Civ 1034
If you would like any further information or advice, please call us on +44 (0) 117 939 2000 and ask to speak to a member of the Employment team, or contact your lawyer at Burges Salmon.