Holiday Pay - The Facts

Following on from a House of Lords judgment last week, the recent changes to the law relating to holiday pay have been badly reported by some of the national press.  Jenny Gibson, solicitor and employment law specialist puts the record straight.  The House of Lords has handed down an important decision relating to holiday pay, which is bad news for employers, says Jenny.

Under the Working Time Regulations, employees are entitled to a minimum of 5.6 weeks’ paid holiday per year – 28 days for a full time worker.  The effect of long-term sickness absence on this entitlement, and the time limits for bringing claims in an employment tribunal, have long been a matter of debate.

“It is now clear”, Jenny explains, “that rather than having just 3 months to bring a claim for statutory minimum holiday pay from the date of each incidence of non-payment, employees can bring claims within 3 months of the last in a series of incidences, meaning employees are better able to bring claims, and those claims can be of higher value.”

“Also, in certain circumstances, it used to be the case that absence from work prevented holiday entitlement accruing.  This is no longer the case, and whereas previously employees could not take paid leave whilst off sick, they can now do so.”

However, Jenny considers that, contrary to some newspaper reports, it appears that untaken holidays still cannot, under the Working Time Regulations, be carried over from one year to the next.  “Public sector employees”, says Jenny, “can rely on European law and insist that, when sickness absence prevents holiday being taking in a particular year, they can carry it over.  However, until the Working Time Regulations are amended to be consistent with this, those working for private employers should take holiday when off sick, if this is necessary to ensure all of their holidays are taken during the particular holiday year – unless their employers’ rules provide that they can be carried over.”

In a warning to employers, Jenny said “It is expected that the UK legislation will be amended to allow long term absentees to carry over holiday entitlement from one year to the next, without limit.”

Jenny recommends that employers should manage long term absence and review their employment contracts in order to mitigate the effects of these developments.