There has been yet another chapter in the thorny issue of whether or not a sick worker’s failure to request holiday affects their right to carry over holiday.  We reported on this issue towards the end of last year, when we specifically looked at the case of Fraser v St George’s NHS Trust, which was a decision that directly conflicted with an earlier decision in NHS Leeds v Larner.  A further appeal in the Larner case has now gone to the Court of Appeal (NHS Leeds v Larner [2012] EWCA Civ 1034) and Alastair Currie reviews the decision below and the impact this could have on holiday rights for sick workers.

The facts

Mrs Larner worked for NHS Leeds as a clerical officer and went on sick leave on 5 January 2009. Having not returned to work, she was dismissed by reason of capability on 8 April 2010. Mrs Larner subsequently lodged a tribunal claim for arrears of pay, specifically in relations to the statutory holiday entitlement that she did not use during her sickness absence and for which she did not receive any payment on termination.

Article 7 of the Working Time Directive provides that member states must ensure that every worker is entitled to paid annual holiday of at least four weeks. This is implemented in Great Britain by the Working Time Regulations 1998, which provide workers with the right to take 5.6 weeks' paid holiday in each leave year.

The Decisions

Employment Tribunal (ET)

The ET upheld Mrs Larner's claim for holiday pay for the leave year from 1 April 2009 to 31 March 2010.

NHS Leeds appealed to the EAT. 

Employment Appeal Tribunal (EAT) Decision

The EAT upheld the ET’s decision; they held that a worker on long-term sick leave who does not request holiday is entitled to be paid for it on termination.

A key aspect of NHS Leeds’ argument was that Mrs Larner lost her holiday entitlement for the leave year up to 31 March 2010 because during that year she had failed to give notice that she wanted to take holiday. The EAT, however, held that it was important that Mrs Larner was signed off sick for the whole of the leave year as this meant she had not been well enough to exercise her "right to enjoy a period of relaxation and leisure" at that time.  As a matter of law, therefore, she "did not have the opportunity" to take her statutory holiday and so her holiday entitlement had carried over to the next leave year, in spite of the fact she had not formally requested this carry over.

NHS Leeds appealed to the Court of Appeal.

Court of Appeal (CA) Decision

The CA upheld the EAT’s decision.  In their judgment, they made a number of comments about Article 7 of the Working Time Directive and how it applied to this case:

  • The right to annual leave in Article 7 was directly effective against an emanation of the state, such as an NHS trust
  • As against a private sector employer, it is possible to interpret the Working Time Regulations to comply with Article 7
  • Under Article 7, NHS Leeds was not permitted to make a payment in lieu of the lost leave while employment continued. Its only option, therefore, was to allow it to be carried forward into a later leave year
  • Under Article 7, if a worker is unable or unwilling to take leave owing to sickness, they must be allowed to take it at another time, if necessary this could be in a later leave year
  • Neither Article 7 or case law requires that a worker must make a request to either take or carry forward annual leave whilst on sickness absence

What about Fraser v St George’s NHS Trust?

By way of a reminder Fraser upheld the general, and somewhat crude, rule of “use it or lose it” and, in doing this, held that the onus was on the employee to request leave, rather than for an employer to advise employees of their rights to it. Should they not make such a request, they were then not entitled to the leave and/or equivalent payment on termination.

Frustratingly, but not unexpectedly, the CA only referred to Fraser in passing and indicated that the facts in that case could distinguish it from Larner.   In Fraser, the employee had returned to work after a period of sickness and had worked for almost a year before being dismissed. Therefore, she had had the "opportunity" to take her holiday in the year before her dismissal, whereas Mrs Larner did not benefit from this opportunity as she was dismissed whilst still on sickness absence. 

The outcome of this, therefore, is that there is still some uncertainty over whether the decision in Larner indicates that Fraser was wrongly decided or whether it was a decision they supported.  What we must take from this, therefore, is that each case must be looked at separately on its facts before a decision can be taken. 

What does this mean for me?

What is clear is that, in both the public and private sector, where a worker is unable to take the four weeks’ annual leave conferred by the Working Time Regulations as a result of their sickness:

  • they must be permitted to take it at another time and this can include carry over into a later leave year
  • should their employment terminate before it is taken, compensation for untaken leave must include any amount owing from leave not taken in previous leave years (and not just for leave owing from the particular year in which their employment ended)

This decision is a logical one when you consider that holiday entitlement is provided to workers for very specific reasons (i.e. to provide necessary rest and recuperation) and therefore it follows that if a worker is sick they cannot take advantage of the protective purposes of holiday and should, therefore, be permitted to take it at a date when they are well.  Should their employment terminate then this right is still owed to them, albeit in the form of a payment equivalent to the period of holiday that they were unable to use. This case clarifies both this and, importantly, what period of untaken leave can be compensated on termination.

An interesting comment from the CA was that the interpretation of Article 7 was constantly evolving and there was a steady stream of cases being referred to the ECJ (which meant they were ‘nervous’ about offending judicial guidance on the interpretation of Article 7 as it might become outdated). On this basis, therefore, it is wise to keep a close eye on this particular area of law as it is too much to hope that this case will be the end of this long-running debate.

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