Many of you will be familiar with the vexed question of holiday accrual and sickness absence resulting from a number of recent decisions from our old friends, the European courts. Apparently the law governing holiday entitlement in this country is going to be updated to bring it into line with European case law. However, notwithstanding this, the EAT are not sitting around twiddling their employment law making thumbs! Oh no, instead, in cases such as NHS Leeds v Larner, they continue to look at questions like: whether an employee who had been on sick leave for the whole of a holiday year was entitled to payment in lieu of that year's holiday on termination?

Mrs Larner went off sick on 5 January 2009 and did not return to work. Since Larner was not capable of working, NHS Leeds terminated her employment on 8 April 2010. Larner successfully brought a claim for payment in lieu of untaken holiday for the holiday year which ran from 1 April 2009 to 31 March 2010. NHS Leeds appealed to the EAT arguing that she had lost her entitlement on 31 March 2010 on the basis that she had not given notice that she wished to take her holiday before that date. NHS Leeds were basically arguing that, in order to be entitled to holiday pay, the employee must give notice to take holiday and that notice must comply with the requirements of the Working Time Regulations.

The appeal was rejected. The EAT clarified that an employee does not have to give notice that meets the requirements of the Working Time Regulations. This would mean that if an employer agreed to an employee's request for holiday that did not meet the notice requirements then this would mean that the 'holiday' would not amount to holiday under the Regulations. This clearly could not be right.

The EAT referred to the European case of Pereda and stated that, since Larner was not well enough to exercise her right to "enjoy a period of relaxation and leisure" during her absence she "did not have the opportunity" to take her holiday entitlement. Therefore, following on from Pereda, her holiday entitlement for 1 April 2009 to 31 March 2010 carried over to the next holiday year. This therefore meant that she had the right to be paid in lieu of this period of untaken holiday on termination.

Once again therefore the tribunals have decided that, notwithstanding the fact that the wording in the Working Time Regulations expressly states that holiday cannot be rolled over from one holiday year to the next, this is in fact permitted following the Pereda case - but without explaining why. On the face of it Pereda means that we must change our law but, until that happens, the tribunals are bound by that law. However, this is not happening and there are therefore likely to be further cases on this point. In the meantime, the choice for you remains the same - either take the risk and not allow sick employees to roll over holiday or be paid in lieu of them or play it safe and permit roll-over and/or pay up.

Let's hope this mess is sorted out very soon!