26 Jul 2012

Court’s Decision on Holiday Accrual During Sick Leave Must Result in More Effective Absence Management

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The Court of Appeal has ruled that workers on long-term sick leave will be allowed to carry forward annual leave into the next holiday year even if the affected member of staff has not made a request to do so.

This stems from a case involving an individual who was dismissed from her employment with an NHS Trust following sick leave absence of sixteen months. Her terms and conditions stated that she would accrue annual leave during sick leave, but that it could only be carried over into the next holiday year in exceptional circumstances.

The Trust did not pay her for the holiday she had accrued in the preceding holiday year during her absence. As a result, the employee brought an employment tribunal claim for unpaid holiday pay under the Working Time Regulations 1998. She won the case and the decision was upheld following appeals by the NHS Trust to the Employment Appeal Tribunal and Court of Appeal.

What are the implications for employers? The decision applies to the statutory leave entitlement of 28 days per annum. So, an employee who is unfortunate to be off work for, say, eighteen months, will now be entitled to take the two months holiday when he or she returns to work. Of course, if the individual’s employment is terminated after eighteen months, then he or she will be paid for the accrued holiday. Either way, there would be significant cost implications for employers.

The Court’s decision places even greater emphasis on the need to ensure that all organisations have an effective absence management scheme in operation where every effort is made to get people healthy and back to work as soon as possible. Alternatively, if they are unlikely to return and so employment will need to be terminated, the scheme will ensure that the employee affected is consulted and fully understands why the decision has had to be taken.

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