UK law is to be read as requiring employers to permit carryover of statutory holiday where an employee has been prevented from taking it due to illness and, on his return to work, has insufficient time to take it within the holiday year (according to a first instance decision).

UK law expressly prevents carryover of the core 4 weeks of statutory holiday entitlement (the employment contract can allow employees to carry over the additional 1.6 weeks). However, in Pereda the ECJ ruled that a worker who is sick during statutory holiday should be allowed under EU law to take the holiday at a later date, if necessary in the following holiday year.

The EU ruling applied to public sector employers immediately, but would only affect private employers if extensive wording could be read into the UK regulations allowing carryover in this situation. According to the EAT in the disability case of Coleman v Attridge, this depends on whether any additional words are compatible with the underlying thrust of the legislation as drafted.

An employment tribunal has now ruled that wording can and should be read into the UK regulations to give effect to Pereda. An employee who broke his ankle before planned holiday and was off sick until after the holiday year ended was entitled to take the holiday in the following year. (Shah v First West Yorkshire, ET).

This suggests that long-term sick employees on PHI may be able to carry over entitlement for several years.

The decision is only at first instance and so is not binding on other tribunals. We understand that it is not being appealed, so private employers may decide to await an EAT ruling - or government amendments to the regulations - before changing their policy. The government recently updated its BIS website to state that carryover "may" be required in this situation and that it will be consulting on possible amendments to the UK regulations following the ECJ rulings.

Employers may also want to wait for the Court of Appeal's judgment on the extent to which words can be read into legislation, due to be considered in the Coleman appeal on 25 March 2010.