In the case of NHS Leeds v. Larner [2012] EWCA Civ 1034 the Court of Appeal considered whether the fact that a worker had been on sick leave for over a year and had not requested to carry forward untaken holiday affected her entitlement to be paid for that year’s statutory holiday entitlement on termination of employment.

The legal background

The EU Working Time Directive 2003 provides that every worker is entitled to paid annual leave of at least four weeks and to a payment in lieu of untaken holiday on termination of employment. The Working Time Regulations 1998 implemented the Directive in Great Britain.

Since the cases of Stringer v HM Revenue & Customs [2009] and Pereda v Madrid Movilidad SA [2009], it has been clear that, under the Directive, workers are entitled to carry forward annual leave from one year to the next where they have been unable or unwilling to take their full entitlement during the leave year because of sickness.  However, one point those cases did not tackle was whether a worker must specifically ask to carry forward leave before the end of the leave year in which it accrued.

NHS Leeds v Larner

Mrs Larner was employed by NHS Leeds. Her leave year ran from 1 April to 31 March in each year. She went on sick leave on 5 January 2009 and did not return to work. Her employment was terminated on 8 April 2010.

Mrs Larner brought a claim in the Employment Tribunal in respect of the statutory holiday entitlement she had not used during her sickness absence in the leave year 1 April 2009 to 31 March 2010.  The key issue in the case was whether Mrs Larner had forfeited her right to the paid holiday as she had failed to ask to carry it forward from the 2009/10 leave year to the 2010/2011 leave year.

The Tribunal upheld Mrs Larner’s claim for holiday pay, a decision which was upheld by the Employment Appeal Tribunal.  NHS Leeds challenged that ruling in the Court of Appeal.

Dismissing the appeal, the Court ruled that if someone on sick leave wishes to carry forward an entitlement to paid annual leave under the Directive to another leave year, there is no legal requirement for them to ask to do so before the end of that year. This ruling only applies to the basic four weeks leave entitlement guaranteed by the Directive. Disappointingly, the Court of Appeal declined to comment on the position in relation to the additional 1.6 weeks’ holiday under our national Regulations. Furthermore, whilst the European Court of Justice has said that there is a limit to the length of time an employee on long-term sick leave can continue to carry over untaken statutory holiday under the Directive (15 months was found to be reasonable in one case), it is still not clear whether a cut off period applies to UK employers. Hopefully new legislation planned by the Government will provide some clarity.

Implications for NHS Employers

Many NHS workers have far more generous contractual holiday rights than those set out in the Regulations.  Rights to accrue and carry forward this kind of leave will be determined by the contract rather than the Regulations.  So it should not be assumed that the rules applying to the Regulations also apply to contractual entitlements.

What is more, workers are not entitled to leave under the Regulations on top of contractual leave (unless their contract says otherwise).  This means that often, where contractual leave is generous, there will be no need to allow carry forward at all over and above any carry forward rights set out in the contract.