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Holiday Entitlement and Sickness Absence

It is well established that all employees are entitled to take a minimum of four weeks’ paid holiday per year free of sickness, and that to the extent an employee who is on sick leave does not take at least four weeks’ holiday, he may carry over such of this entitlement as he does not exercise into the next holiday year.

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Plumb v Duncan Print Group Limited

In a recent case, Plumb v Duncan Print Group Limited, the Employment Appeal Tribunal (“EAT”) was required to decide on two important points:-

(i)    Does an employee on sick leave have to show he was unable by reason of illness to take holiday for it to be carried forward?; and

(ii)    Is the right to carry forward unlimited?

Mr Plumb, a printer, took four years' sick leave following an accident. Upon dismissal he claimed 60 days' accrued holiday pay for 2010, 2011 and 2012. The employment tribunal dismissed the claim because he was unable to show that his medical condition was the reason he did not take his leave. The EAT overturned the finding: an employee may be unable or merely unwilling to take such holiday and will be entitled to take it at a later date, or be paid for it if the employment terminates.

EAT decision

As regards how long such holiday entitlement can be carried over for, the EAT ruled that it is clear from the wording of the Working Time Directive and the case law of the European Court that national law is not required to allow carry forward without limit and that words should be read into the Working Time Regulations permitting a worker to take annual leave only within 18 months of the end of the leave year in which it accrued. Mr Plumb was therefore held to be entitled to payment in lieu of annual leave for 2012, but not for 2010 and 2011.

This interpretation of the law has been open to employment tribunals to apply for some time – but many, and perhaps most, would not have done so. However, this decision will be binding on employment tribunals going forward, unless and until it is overruled by the Court of Appeal (and both parties in this case have been given permission to appeal) or, in the absence of a decision in a higher court, the decision is departed from by the EAT in a future case.

The decision is good news for employers who have employees on long term sick leave – and many employers have employees who have been off for many years – who would otherwise have been able to take considerable accrued, paid annual leave (whether during their on-going absence or upon a return to work), or be paid a significant amount of accrued holiday pay in the event of the employment ending for any reason.