The Claimant was off work on sick leave from 2010 until the termination of his employment in 2014. From 2010 to 2013 he did not request any holiday. When his employment ended he argued that he was entitled to payment in lieu of the holiday that had not been taken during these years.
When the case came before the Employment Tribunal, the Judge declared that the relevant issue, in determining if the Claimant was entitled to payment in lieu of his holiday, was whether the Claimant was ‘unable’ to take his leave due to sickness. The Judge concluded that the Claimant was able to take his annual leave whilst he was on sick leave, but chose not to. As a result, the Claimant’s claim was dismissed. He then appealed to the Employment Appeal Tribunal (‘EAT’).
The EAT allowed the appeal in part. It stated that the Employment Tribunal had erred in concluding that an employee who was on sick leave needed to demonstrate that he was unable, by reason of his medical condition, to take annual leave.
Article 7 of the Working Time Directive provides that an employee who is on sick leave, and who would be permitted to take paid annual leave during that sick leave, is not required to take annual leave whilst on sick leave but may choose to do so. Where, as in this case, the Claimant did not wish to take annual leave during periods of sick leave, he was entitled to take the annual leave at a later date. However, EU law does not confer an unlimited right to carry over periods of annual leave to subsequent years. At most, it only requires that employees on sick leave are able to take annual leave within a period of 18 months of the end of the leave year in respect of which the annual leave arises. Therefore, the Claimant was entitled to compensation for the 1 February 2012 to 31 January 2013 leave year, as annual leave for that could be taken until 18 months after that date, that is until 31 July 2014. He was not entitled to compensation for the earlier years, as the 18 month time limit had already expired before the termination of his employment.
Tips for Employers
This case is useful in clarifying the terms upon which employees can/are obliged to take annual leave whilst they are on sick leave. However, considering the importance of the issues in the case, the parties have been given leave to appeal to the Court of Appeal. We will keep you updated.
The Chancellor of the Exchequer, George Osborne, delivered his first Conservative budget on 8 July 2015. The key points relating to employment are as follows: