Law on Holiday Pay Clarified

In NHS Leeds v Larner, the Court of Appeal has sought to ensure consistency in the approach of employment tribunals to the holiday pay rights of workers whose employment is terminated after extended periods of sick leave.

A clerical officer employed by NHS Leeds was on sick leave for the whole of the financial year 2009/10. During that year she neither took paid annual leave nor did she request her employer to carry it forward to the next financial year, at the beginning of which her employment was terminated.

The employee argued under Article 7 of the Working Time Directive and the Working Time Regulations 2008 that she had the right, without prior request, to carry forward to 2010/11 the paid annual leave accrued, but not taken, during her period of sickness absence in 2009/10.

Her plea that, on the termination of her employment, she should have been paid in lieu of the untaken leave was upheld by an employment tribunal and by the Employment Appeal Tribunal (EAT).

Dismissing NHS Leeds’ appeal against the EAT’s decision, the Court of Appeal has ruled that the employee was entitled to be paid for the annual leave she was prevented from taking because she was sick. She was entitled to carry forward untaken holiday leave to the next financial year, without making a request to do so, and on termination of her employment she was entitled to be paid in lieu for the holiday leave she had been unable to take.

The Court commented that the law on paid annual leave is still unfolding and expressed the hope that the decision in this case would ‘produce more consistency’.