In a decision that will be welcomed by employers the EAT has ruled that an employee on long-term sick leave must have requested annual leave to be entitled to holiday pay for leave years preceding the leave year in which employment ends (Fraser v Southwest London St George's Mental Health Trust).

According to EAT President, Sir Nicholas Underhill, an employee's entitlement to holiday pay under regulation 16 (1) of the Working Time Regulations 1998 depends on them giving proper notice under regulation 15 of their intention to take annual leave. He said that without such notice an employer who is not otherwise paying the employee, or is only paying them sick pay "will not know whether, or – just as importantly – when, he is obliged to make any payment under regulation 16".

An employee may choose to take annual leave during a period of sickness absence or they can ask for it to be deferred until a later period. However, they must ask to do so and termination of the employment relationship does not create an entitlement to holiday pay for previous leave years which never arose at the time because the employee failed to request leave. The ordinary rule is 'use it or lose it' with a possible exception where the employee has not "had the chance to take holiday".

In another "win" for employers, although more questionable in the context of industrial relations, the EAT ruled that absent special circumstances there is no duty on an employer to advise employees of their rights under the general law. The fact the Trust had failed to alert Mrs Fraser to her rights in relation to holiday pay was therefore irrelevant.