An Employment Tribunal has applied a recent European Court decision to the UK's Working Time Regulations and ruled that an employee who was sick during his pre-arranged holiday is entitled to carry over his 'lost' holiday to the next holiday year.
As an Employment Tribunal decision it is not binding on other Employment Tribunals but could indicate how other Employment Tribunals will deal with cases concerning the carry over of holidays lost due to sickness.
Unfortunately this decision puts employers in a difficult position. Under the Working Time Regulations (WTR) employees are prohibited from carrying over more than 8 days holiday to the next holiday year. However this decision suggests that Employment Tribunals may override this provision in the UK's WTR and instead give effect to a recent European Court (ECJ) decision (Pereda) which ruled that under European law employees should be allowed to carry over holidays lost due to sickness to the next holiday year.
Until the position is clarified by either a ruling from a higher Court or amendments to the WTR, employers will have to make a judgment about whether to take a cautious approach and allow employees who have lost holiday due to sickness to carry over that holiday to the next holiday year; or, take a robust approach (which may result in an employment tribunal claim) that in such cases the employee will 'lose' their holiday and cannot carry it over to the next holiday year.
This Tribunal decision follows guidance published by the Government last week on the 'interaction of annual leave and sick leave' on the BIS website. This confirms that the Government are going to consult on possible amendments to the WTR in light of recent European Court decisions. However the guidance also states that as a result of these recent European Court decisions "a worker who has missed out on statutory annual leave due to sickness, may (our emphasis) be able to carry over the missed leave to the next leave year".
In the case of Shah v First West Yorkshire Limited (First West), Mr Shah booked 4 weeks' holiday for 22nd February to 21st March 2009. As he worked part-time (3 days a week) this represented 12 days of his annual holiday entitlement. First West's holiday year runs from 1st April to 31st March. However in January 2009 Mr Shah broke his ankle and was therefore off work sick from 15th January to 18th April 2009. When he asked his employer to reclaim the 12 days holiday he had been unable to take due to sickness, First West informed him that as the holiday related to the previous holiday year, it had been 'lost'. Mr Shah brought a claim for loss of holiday under the WTR.
The Employment Tribunal upheld Mr Shah's claim. In doing so the Employment Tribunal applied the ECJ's decision in Pereda v Madrid Movillad (see Howes Percival Newsflash 30th September 2009) which ruled that under the European Working Time Directive (the Directive) workers who are sick during a pre-arranged holiday should be allowed to take that holiday at a later date, even if that means carrying over the holiday to the next holiday year.
The UK's WTR are intended to implement the European Working Time Directive. In the Employment Tribunal's view it was therefore obliged to interpret the WTR in line with holiday rights under the Directive as set out by the ECJ in Pereda.
The Employment Tribunal noted that the aim of Regulation 13 (9) of the WTR (which prevents the carry over of holiday to the next holiday year) is to give workers regular periods of paid holiday each year and prevent workers storing up holiday over several years. The Employment Tribunal ruled that it was "entirely consistent" with the aim of this Regulation to allow workers who were unable to take their holiday (which is a period of leisure) due to sickness, to be allowed to take that holiday in the next holiday year.
Therefore the Tribunal construed Regulation 13 (9) by adding words (in italics below) to it to give effect to the Directive following the Pereda decision.
'Leave may only be taken in the year in respect of which it is due 'save where a worker has been prevented by illness from taking a period of holiday leave, and returns from sick leave, covering that period of holiday leave, with insufficient time to take that holiday leave within the relevant leave year; in which case, they must be given the opportunity of taking that holiday leave in the following leave year'.
As a result of these new words being added to Regulation 13 (9), the Employment Tribunal found that Mr Shah was entitled to take the holiday he had been prevented from taking due to sickness, at another time in the following leave year.