In the much anticipated Court of Appeal decision in NHS Leeds v Larner, it has been held that a worker who was unable to take four weeks’ annual leave due to sickness did not have to make a request to carry the untaken leave over into the next leave year in order to receive a payment in lieu of it on termination of employment.

Ms Larner was a clerical officer for NHS Leeds who went on paid sick leave in January 2009 and did not return to work before she was dismissed in April 2010. She did not request annual leave during 2009/10 nor did she ask to carry forward her accrued leave. After she was dismissed, she claimed that both the Working Time Regulations (“WTR”) and Article 7 of the EU Working Time Directive (the “Directive”) entitled her to payment in lieu of untaken annual leave for the 2009/10 leave year. 

The Tribunal and the EAT both found in favour of Ms Larner. In particular, the EAT held that following the recent ECJ judgment in Pereda, Ms Larner was entitled to carry over her leave entitlement without having to make a formal request, and she was entitled to be paid in lieu for the accrued but untaken holiday days. NHS Leeds’ appeal to the Court of Appeal was rejected following a consideration of both the ECJ judgments in this area as well as the WTR. 

Earlier this year the ECJ gave judgment [Dominguez –v- Centre informatique due Centre Ouest Atlantique and another [2012] IRLR 321] clarifying that Article 7 has direct effect against an emanation of the state, which the parties in the Larner case agreed included Leeds NHS.   None of the ECJ decisions require a worker to make a request to take paid annual leave or carry it forward to another leave period.  Further, in respect of the WTR the Court of Appeal held that regulation 15 (which relates to the requirement for a worker to give notice to take leave) does not apply to a worker on sick leave who is prevented by their sickness from taking paid annual leave during that period of sick leave.  The Court stated that it would be possible, if necessary, to construe the WTR to conform with the Directive, meaning that all employees (not just those employed by an emanation of the state) should be subject to the same principles.

The Court of Appeal referred only briefly to the case of Fraser v South West London St George’s  Mental Health Trust [2012] IRLR 100 in which the EAT held that a sick employee was not entitled to carry over leave entitlement when a request to do so had not been submitted to their employer.  The Court of Appeal held that the facts of Larner and Fraser could be distinguished in that in Fraser the employee had returned to work for a period of time and therefore had the opportunity to take holiday before her dismissal.  However, it is not clear that the Court of Appeal determined that Fraser was wrongly decided. 

Unfortunately, the Court of Appeal declined to provide general guidelines on issues relating to holiday and sick leave on the basis that ECJ authority in this area is still developing.  However, it is important that employers keep their sick leave and holiday leave policies under review, to ensure that they are compliant with the current state of the law in this area.