In the recent case of Khan v Martin McColl the employment tribunal considered a claim for holiday pay by a worker on long-term sick leave. In the case of Stringer and others v HM Revenue and Customs (which has been covered in previous e-bulletins) the European Court of Justice confirmed that workers on sick leave continued to accrue holiday rights and if they were prevented from taking their holiday because of sickness they must be allowed to take it following their return to work, even if this means that the holiday entitlement is carried forward to the next holiday year.

Mr Khan transferred to Martin McColl in 2007. As part of the transfer process the company confirmed that no transferring employee would lose any holiday entitlement that had been accrued but not taken before the date of transfer. At the time of the transfer of his employment, Mr Khan had two weeks accrued but unused holiday and the tribunal found that this was carried over into the 2008 holiday year as a result of the company's guarantee. Mr Khan was also entitled to four weeks' holiday in respect of the 2008 holiday year which meant that he had a total entitlement of six weeks for the 2008 holiday year. Due to long term sickness absence from May 2008 Mr Khan was unable to take any holiday in the 2008 holiday year and he did not return to work prior to his resignation in August 2009. The company made a payment in lieu of the holiday he had accrued prior to his resignation during 2009 on termination of his employment.

Relying on the Stringer decision, Mr Khan argued at the tribunal that he was entitled to be paid in lieu of the six weeks' accrued but unused holiday from 2007 and 2008 (being the two weeks carried over from 2007 and the four weeks' holiday entitlement from 2008). The tribunal dismissed Mr Khan's claim on two grounds:

  1. Mr Khan's claim was out of time. The company successfully argued this as there was no right to carry forward arcaded but unused holiday entitlement from 2008 into 2009; a payment had been made to Mr Khan in lieu of the holiday he had accrued in 2009 so there were no deductions from wages in the year of his termination; the right to holiday pay for 2008 expired on 31 December 2008 so the last deduction from wages was made on that date; Mr Khan would need to bring any claim for either unlawful deductions of wages or under the Working Time Regulations 1998 by 31 March 2009 and he had missed this deadline.
  2. Mr Khan did not apply to take holiday in 2007, 2008 or 2009. The company argued that employees on sick leave would be in a better position than colleagues who were working if they were able to carry forward their holiday entitlement without having to make a request. The tribunal referred to the Stringer decision which held that workers on sick leave were entitled to carry forward their holiday if they were 'denied' that holiday. As Mr Khan had not requested any holiday he had not been 'denied' the right to take holiday. It did not matter that he was unaware that he could request holiday, that it was not unreasonable for him not to be aware of this or that he would have requested the holiday had he known.

This is an interesting case for employers as it means a 'perfectly good claim....can be defeated simply by the expedient of paying the last amount of holiday pay'. Whilst this is only a tribunal decision and is not binding on any other tribunal or higher court, employers should be aware of these points when dealing with employees on long term sick leave. The arguments in this case potentially allow for employers to avoid a situation where an employee who has been on long term sick leave for a number of years seeks to obtain an additional payment in respect of any holiday accrued during their absence.