Court of Appeal ruling on annual leave & sickness absence

The Court also ruled that a worker who becomes sick whilst on a scheduled holiday from work is entitled to take that annual leave at another time when they are not ill.

In addition, the ruling confirmed that:

• workers accrue holiday whilst on sick leave,
• if workers are prevented from taking their holiday because they are sick they can carry it forward without having to make any request to do so,
• workers who are unable, because of sickness, to take their carried-forward holiday before the employment terminates are entitled to be paid in lieu on termination.

This is the first Court of Appeal ruling on carrying forward holidays and is bad news for employers. It opens the way for workers on long-term sickness absence to claim holiday pay when their employment terminates for the whole period of their absence. The ruling could prove very costly, with someone who has been off sick but ‘left on the books’ for three years being entitled to almost four months’ accrued holiday pay on termination, in addition to their notice pay and any other outstanding payments.

The UK government is currently proposing amendments to the Working Time Regulations to allow annual leave to be carried forward where workers have been unable to take it because of sickness and where it has not been possible to reschedule the leave in the current holiday year. It is also proposing to limit the annual carry-over to only 4 weeks of the 5.6 weeks’ entitlement.