Background/Facts

As readers of this update will be aware, earlier this year the European Court of Justice ruled that employees should continue to accrue statutory holiday whilst off sick.

There were several questions left open as to how this might operate however and it was hoped that the House of Lords would clarify some of the issues.

Unfortunately, due to the way the legal system of precedents and appeal points operates (because the parties reached agreement on many aspects of the case) their Lordships did not need to discuss very thoroughly how the European Court of Justice decision should be practically applied in the work place. The result is somewhat confusing for employers and employees alike and results in conflicting authorities relating to the accrual of statutory holiday whilst off sick, which will now have to be clarified by future case law.

Comment

The following points can now be confirmed following the UK House of Lords Judgment:

• Claims for statutory holiday pay can be brought as an unlawful deduction from wages claim in the Employment Tribunal, in addition to a claim under the Working Time Regulations.  This is bad news for employers, as wages claims have more generous time limits because they can be brought within three months of the last in a series of non payments, whereas a claim under the Working Time Regulations should be brought within three months of the date of each non payment.
• It is clear that UK law permits employees to take statutory holiday during sick leave, although there are possibilities for employers to refuse requests by giving notice.
• Employees do continue to accrue the right to paid statutory holiday during sick leave (regardless of length of that sick leave).

There are however various grey areas that remain, for example:

• Whether or not in the UK the carry-over of statutory holiday from one year to the next is permissible.  European law says this should be permitted where an employee has been unable to take the leave, whereas UK law does not permit the carry-over of statutory holiday from one year to the next.  As European law takes precedence over the UK law it is likely that statutory holiday will be able to be carried over in the future, but there may need to be an amendment to UK law first. A key question however is how to assess when an employee will be treated as having been “unable” to take their leave in a holiday year and future case law may be needed to clarify.