05-12-2011

Employers still unclear over sick workers’ rights to holiday pay

Recent inconsistent legal decisions over the holiday pay rights of workers on long-term sick leave mean that employers are still uncertain over their obligations.

The Employment Appeal Tribunal (EAT) recently ruled in one case that workers on long-term sick leave whose employment is terminated are only entitled to holiday pay for the years prior to the termination if they actually gave notice to their employers, at the relevant time, that they wanted part of their sick leave to be treated as holiday.

The worker in that case was claiming unpaid statutory holiday pay in respect of two holiday years that had ended before the year her employment was terminated. She had been off work on long-term sick leave (and therefore without other pay) during the whole of those years. It was accepted that she had accrued the right to claim annual leave in each of the two years in question, but the employer argued that to be able to exercise that right she had to give notice to that effect at the relevant time under the Working Time Regulations. The EAT agreed. She had not done so and was not therefore entitled to holiday pay for those years.

However, another recent decision came to an inconsistent conclusion – that it is not necessary for an employee to give notice for a particular year if the worker is on sick leave throughout the whole holiday period. That decision is, however, currently on appeal to the Court of Appeal. Until the Court makes its ruling there is still uncertainty for both employers and employees.

Recommendation

Employers whose workers are absent on long-term sick leave should always take advice before deciding whether to compensate those workers for untaken holiday on termination of their employment.