The EAT has held that sick workers do not have to demonstrate that they were unable to take annual leave during a period of sickness absence in order to carry over the annual leave into a new leave year. The mere fact of being absent on sick leave and having not made a request to take the annual leave demonstrated an unwillingness to take annual leave and this was sufficient. It also held that the maximum carry over period is 18 months (Plumb v Duncan Print Group).

Background

Entitlement to carry over annual leave

Our domestic legislation originally stated that annual leave had to be taken in the leave year in which it was due and it could not be paid in lieu, save upon termination (regulation 13 (9) of the Working Time Regulations 1998 (WTR)).  However, these provisions conflicted with the ruling of the ECJ in Pereda v Madrid Movilidad SA, where it was held that if workers did not wish to take their annual leave entitlement during a period of sick leave then the annual leave must be granted at a different time, even if it meant carrying it over to another leave year.

This conflict was resolved by the Court of Appeal in the case of NHS Leeds v Larner where the following words were read into regulation 13(9) of the WTR to allow compliance with the Working Time Directive (WTD): "Leave to which a worker is entitled under this regulation may be taken in instalments, but (a) it may only be taken in the leave year in respect of which it is due, save where the worker was unable or unwilling to take it because he was on sick leave and as a consequence did not exercise his right to annual leave".  The Court also read words in to allow any carried over leave to be included in a pay in lieu of accrued but untaken holiday upon termination.

Further, in the case of Sood v Healey the EAT confirmed that the requirement to allow the carry over of annual leave for sick workers only applied to leave which was derived from the WTD (i.e. 4 weeks' leave per annum).  The WTR prohibits the carry over of the additional 1.6 weeks' granted under the WTR, unless there is a relevant agreement.

Limitations on the right to carry over

Although it was clear that the carry over of annual leave for sick workers must be permitted, what was less clear was whether this was an unlimited right.  In the case of KHS AG v Schulte the ECJ held that there should be a limitation on the carry over period, although the carry over period should be significantly longer than the leave year.  In that case the ECJ held that a carry over period of 15 months was lawful, although it was not clear whether this was the minimum for all cases or fact specific.  Indeed, the Advocate General in that case had recommended a carry over period of 18 months, on the basis of the recommendation set out in the International Labour Organisation (ILO) Convention.

In Plumb the EAT had to consider whether a worker who had not asked to take holiday whilst on sick leave was entitled to a pay in lieu of 3 years' worth of accrued statutory leave upon termination.

Facts

The Claimant had an accident at work and was off sick between 26 April 2010 and 10 February 2014 when his employment terminated.  Whilst off sick he didn’t ask to take any annual leave until September 2013, when he asked to take all of his leave from 2010 onwards.  The employer agreed that he could take the 13/14 leave but refused the requests for the 10/11, 11/12 and 12/13 leave years.  When his employment terminated in February 2014, the Claimant brought a claim for a payment in lieu of accrued but untaken holiday from the three outstanding leave years. 

Applying Larner, the Employment Tribunal (ET) held that the key issue was whether the Claimant was unable to request leave due to his medical condition.  They noted that although the Claimant had had surgery on various occasions throughout his sick leave and was also depressed, he had continued to work at weekends at a local B&Q store and he had also taken a week's holiday in 2012.  The ET said that these facts "severely damaged" the argument that the Claimant had been unable to take annual leave.  They concluded that the Claimant had been able to take the leave.  Therefore, the test introduced by Larner had not been satisfied and the leave did not carry over.  The Claimant appealed.

EAT decision

Entitlement to carry over annual leave

The Claimant argued that it was not necessary for sick workers to show that they were "unable" to take their annual leave in order to carry it over.  Rather, it was sufficient to be on sick leave and choose not to take the annual leave. 

The EAT held that the ET had erred in concluding that sick workers had to show they were unable to leave because of their medical condition.  The WTD provides that sick workers are not required to take annual leave during a period of sick leave, but may choose to do so.  If they choose not to do so, then they must be allowed to take it at a later period.  The EAT highlighted that the purpose of sick leave is to enable recovery from illness, whereas the purpose of annual leave is to enable periods of rest and relaxation for reasons of health and safety.  They concluded that it would not be consistent with the underlying purpose of these two rights to compel a sick worker to take annual leave during a period of sick leave if they did not wish to do so.

They also held that it was not possible to separate inability and unwillingness to take annual leave during a period of sick leave.  The ET had been were wrong to focus on inability alone: if an employee is on sick leave and chooses not to request annual leave then the issue of whether they are willing to take the leave is inevitably engaged.  Here, the Claimant had been on sick leave and had  not asked to take annual leave.  The only inference that could be drawn from this is that he was unwilling to take annual leave.  Therefore, the test in Larner was satisfied and the Claimant was entitled to carry over the accrued but untaken annual leave for all years. 

Limitations on the right to carry over

The next question was whether any limitation on the length of carry over should be imposed.

The Claimant argued that there were no limitations on the carry over period in UK law.  He also submitted that the provisions of the ILO Convention were not enforceable in the domestic courts in theUK.  The EAT rejected these arguments and held that an 18 month carry over limit applied.  They considered that regulation 13(9) should be interpreted as far as possible in light of the wording and purpose of the WTD.  That purpose was the health and safety of workers.  Carried over annual leave ceased to reflect that purpose after a certain amount of time had elapsed.  Further, recital 9 of the WTD provides that the ILO Convention principles were relevant to the interpretation of the WTD.  Therefore, the EAT concluded that the WTD does not require indefinite carry over - "at most" it required carry over of 18 months. 

Comment

This decision helpfully provides clarity that the upper limit for carry over of annual leave derived from the WTD is 18 months.  Employers may wish to amend holiday and sickness absence policies accordingly, remembering that this decision does not apply to the additional 1.6 weeks' WTR-derived annual leave or any additional contractual annual leave.  It is also worth noting that leave to appeal this decision has been granted and so this may not be the last word on the subject.

Plumb v Duncan Print Group