Can an Employee Carry Over Holiday Pay When Sick?

Under the Working Time Regulations 1998, the general rule is that workers must use up their statutory holiday entitlement in the current holiday year, or they lose it. Employees on long-term sick leave are an exception to this rule; they are permitted to carry over untaken holiday to the next holiday year. The recent case of Plumb v Duncan Print Group considered whether an employee would have to demonstrate that he was unable, because of illness, to take annual leave and whether the right to carry forward leave is unlimited.

Mr Plumb was forced to take four years' sick leave following a serious accident which left him unable to work. He was eventually dismissed in 2014 and brought a claim in the Employment Tribunal for 60 days’ holiday he had accrued but not taken during 2010 to 2012. The Employment Tribunal dismissed Mr Plumb’s claim on the basis that he was unable to demonstrate that his medical condition was the reason why he did not take his annual leave.

Mr Plumb appealed to the EAT who took a different view. The EAT held that Mr Plumb did not have to show that he was physically unable to take his holiday in order to be allowed to carry it forward. Mr Plumb could choose to take the leave in the relevant leave year; if he opted not to, he was entitled to take the leave at a later date.

However, the EAT went on to say that untaken annual leave cannot be carried forward indefinitely. The EAT held that the right to carry forward annual leave is limited to a period of 18 months at the end of the leave year in respect of which the leave arises.

For Mr Plumb, this meant that whilst he was entitled to receive payment in lieu of annual leave for 2012, he did not have the right to receive payment for untaken annual leave for 2010 or 2011.

This is useful guidance for employers managing employees on long-term sick leave, however we will all need to watch this space as both parties have been granted permission to appeal to the Court of Appeal.

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