The Court of Appeal in NHS Leeds v Larner has confirmed that workers on sick leave can carry forward unused statutory holiday entitlement without needing to make a formal request to do so. This applies not only in the public sector – where the Working Time Directive has direct effect – but also to workers in private companies. In the latter case, although they cannot rely on EU law directly, the Court of Appeal now says it is possible to interpret our domestic legislation (ie, the Working Time Regulations) to give effect to the Directive in this respect.

In this case, Mrs Larner was absent on sick leave for the whole of the leave year 2009/10. During that year she did not take any paid annual leave and she did not request NHS Leeds to carry it forward to the next year (2010/11). In early 2011 she was dismissed. NHS Leeds refused to pay her for the leave not taken by her in 2009/10. She claimed a payment in lieu of the untaken leave.  

We know that, under EU Law and the Working Time Directive, annual leave accrues during sickness absence and an employee who is prevented from taking annual leave through sickness must be allowed to take their annual leave that they missed later in the year, or if that is not possible, in a subsequent leave year.

In Larner, the Court of Appeal found that there was no requirement that the employee must have made a request to carry leave forward. Mrs Larner was therefore entitled to receive payment in lieu of her untaken statutory annual leave upon her dismissal.

In its consultation on modern workplaces published last year, the Government proposed a number of amendments to the Working Time Directive which would broadly speaking reflect the impact of Larner and the earlier decisions it builds on. The consultation also addresses a point which did not arise in Larrner, but has now been the subject of a decision of the European Court of Justice in the Neidel case, which confirmed that the principle of carry forward in the event of sickness applies only to the four weeks’ leave guaranteed by the Directive. The Government proposes that only the core four week entitlement can be carried forward, and not any higher contractual entitlement.