Further guidance has been handed down by the EAT in the case of NHS Leeds v Larner in the long-running issue of employees' accrual of holiday entitlement whilst absent on sick leave.  The EAT has held that an employee who had been on sick leave for an entire leave year was entitled to payment in respect of statutory holiday for the year, despite failing to make any request for leave during her sickness absence.

Mrs Larner was off sick from 5 January 2009 until her dismissal on 8 April 2010.  She brought a claim for her holiday pay for the leave year from 1 April 2009 to 31 March 2010.  Her employer refused on the grounds that her entitlement was lost on 31 March 2010, as she had not requested to use it prior to this date, and the Working Time Regulations 1998 (WTR) prohibits carry-over (Regulation 13).   The EAT held, however, that the key consideration was simply whether Mrs Larner had lost her entitlement to her holiday under Regulation 13 by failing to ask for it.  In light of the European Court of Justice (ECJ) decision in Pereda, it was clear that she did not, and her entitlement could be carried over into the subsequent year, and payment made for her accrued holiday upon termination of her employment.  By virtue of being on sick leave, she did not have the opportunity to use her holiday entitlement.  The EAT did however comment that the situation might be different in the case of a fit worker who fails to request statutory holiday during the relevant leave year. In such circumstances, the worker's holiday entitlement might be lost, certainly if their contract provides as such, because they "had the opportunity" to exercise their statutory holiday rights.

Impact on employers

  • This case confirms the position adopted by the ECJ in Pereda, that an employee who is prevented from taking annual leave due to sickness absence is entitled to carry over their statutory leave into a subsequent leave year.  The EAT however failed to address the matter of how this sits with the WTR, which expressly prohibit carry over.  Given the lack of clarity on this conflict, it is likely that further litigation on this matter will arise, unless the WTR are amended.