Under the European Working Time Directive, workers are entitled to a minimum of four weeks’ paid annual leave.

The UK Working Time Regulations provide for a more generous 5.6 weeks’ paid annual holiday. Recent ECJ decisions on holiday entitlement and sickness absence have expanded the statutory provisions. It is now clear that workers on sick leave continue to accrue holiday, and may carry over any accrued but untaken holiday to a subsequent leave year if they could not take it due to sickness.

The recent ECJ case of Neidel v Stadt Frankfurt am Main has now confirmed that workers are only entitled to carry over four weeks’ annual leave accrued whilst on sickness absence. In addition, on termination of employment, workers are entitled to be paid in lieu of holiday accrued but not taken because of sickness. However, this requirement only relates to the four weeks’ minimum leave prescribed by the European Working Time Directive. It is up to member states to decide whether to provide for a more generous entitlement. In Neidel, a worker on long-term sick leave was only allowed to carry over holiday for nine months after the end of the leave year. Given that the carry over period should be substantially longer than the relevant holiday reference period, nine months was held to be too short as the leave year was 12 months.

The Government is in the process of amending the Working Time Regulations to take account of recent case law, but has already indicated that it intends to limit carry over of holiday to the minimum four weeks’ entitlement rather than the full 5.6 weeks’ leave. In KHS AG v Schulte a carry over period of 15 months was held to be compatible with the Working Time Directive. It therefore seems unlikely that the Government will set a carry over period of less than 15 months.