The EAT has suggested that workers who have been unable or unwilling to take holiday for reasons beyond their control might be entitled to carry over holiday to the next holiday year and be paid in lieu on termination.
The Working Time Regulations 1998 ("WTR") provide that holiday must be taken in the year in which it falls due, in the absence of any agreement to the contrary (Reg 13(9) WTR).
However, in NHS Leeds v Larner  the Court of Appeal, applying EU case law, held that the WTR did not properly implement the Working Time Directive in respect of employees who were unable or unwilling to take their statutory minimum holiday because they were on sick leave. The Court of Appeal held that Reg 13(9) had to be read as including an exception to the rule prohibiting carry-over of holiday in those circumstances. Please click HERE for our full briefing on that case.
Sash Window Workshop Ltd and another v King
Mr King worked for Sash Window Workshop as a commission-only salesman (purportedly on a self-employed basis). He was not paid for sick leave, nor was he entitled to paid holiday. His contract was terminated when he reached the age of 65 and he brought various claims, including a claim for unpaid holiday on the basis that he was a "worker", and so entitled to paid holiday.
The Employment Tribunal found that Mr King was a "worker" and was therefore entitled to claim for unpaid holiday he should have received. The Tribunal included in Mr King's compensation both holiday pay for periods that Mr King had taken (which had not been paid at the time) and, in a novel departure, holiday pay for periods of holiday he had not taken in previous years. Relying on Larner, the Tribunal concluded that the prohibition on carrying-over statutory holiday entitlement should not apply where, as here, the employee was not unable to take the leave by reason of sickness, but was unable to take it because he would have been refused paid leave if he had asked for it.
Sash Window Workshop appealed, arguing that Mr King had not been unable to take his statutory minimum holiday. In fact, he had taken a large proportion of his statutory minimum holiday each year (though he had not received holiday pay at the time), and therefore the Larner exception should not apply.
The EAT allowed the appeal. The Tribunal had made no findings of fact as to whether Mr King had been restricted by "reasons beyond his control" from taking his statutory minimum holiday in any of the holiday years in question. The Tribunal had simply assumed that the employer would have refused to pay Mr King for holidays if he had requested it, but there were no findings of fact by the Tribunal to support the assertion that Mr King was prevented from taking the leave. The EAT remitted that issue for reconsideration by the Tribunal.
The EAT also held that, even if that claim had been made out, he was not entitled to holiday pay for the days of holiday he was unable to take. He had continued to work during those periods which he would otherwise have taken as holiday and had been paid for that time in the usual way. There was therefore no loss of "wages", and to permit him to recover holiday pay for the same period would have led to double recovery. The appropriate remedy would be such compensation as the Tribunal considers to be "just and equitable" for the loss of the health and welfare benefits of taking holiday.
Although the Tribunal's findings were overturned on the facts of this case, the EAT appears to have accepted that the principle in Larner is not restricted to sickness absence cases. Rather, in any case where a worker is unable to take his statutory minimum holiday entitlement, for reasons beyond his control, he is potentially entitled to have that entitlement carried over into the next holiday year.
Though the point was not taken before the EAT, it is likely that that principle only applies to the first four weeks of statutory holiday entitlement (being the portion guaranteed by European law), and not the additional 1.6 weeks guaranteed by the UK legislation.