A test case recently brought before the Employment Tribunal aimed to clarify the law on annual leave entitlement for employees on long-term sick leave. In its March 2013 judgment the tribunal held that staff who are unable to take statutory annual leave due to serious ill health are entitled to carry over that leave to the next holiday year.
The applicant was employed in Ogier's compliance department. In March 2011 she was signed off sick due to an operation. She remained on fully paid sick leave until September 2011. In September 2011 the applicant discussed the possibility of being fit to return to work, but was deemed by her doctor not to be well enough to return. She therefore remained off work until the following January and received 75% of her salary under the firm's permanent health insurance policy.
In January 2012 the applicant advised her employer that she was well enough to return to work. However, despite efforts to get the applicant into the workplace to discuss potential work options, she never returned. She remained on full pay between January and March 2012, when her employment was terminated by reason of redundancy.
On termination, the applicant was paid for three days of annual leave that she was permitted to carry over from 2011 under the terms of the staff handbook. She was also paid in lieu for her 2012 holiday entitlement.
The applicant claimed that because she was on sick leave, she was entitled to carry over all of her untaken 2011 statutory holiday entitlement. She also claimed a day's pay for each of the bank and public holidays that occurred while she was signed off work.
Articles 11 and 13 of the Employment (Jersey) Law 2003 state that an employee is entitled to two weeks' paid annual leave in each leave year. Article 14 states that in the year of termination, the employer must buy out any untaken leave, or if the employee has taken too much leave the extra days must be paid back to the employer.
Employees are also entitled to leave on all public or bank holidays. If required to work on a bank or public holiday the employee is entitled to another day off in substitution.
An employer can give more generous holiday entitlement (in terms of both the number of days and the right to carry over), but this allowance must not fall below the statutory minimum.
The employer argued that where an employee cannot take statutory holiday due to ill health, the entitlement is lost at the end of the leave year (ie, there is a 'use it or lose it' rule). The tribunal disagreed and held that an employee who cannot take holiday because of serious ill health is in the same situation as one who cannot do so because of a defiant refusal on the part of the employer.
On the facts, the tribunal found that the employee had not been too ill to take holiday. She had been contemplating a partial return to work from September 2011 and was fit to return to work in January 2012. As she had had the opportunity to take her to leave before she left in March, she was not entitled to be compensated for the untaken leave.
In relation to bank and public holidays, the tribunal held that the applicant had already been paid for these days and was not entitled to be paid again simply because she was sick. That would have put her in a better position than her healthy colleagues.
The decision of the tribunal puts employers in the difficult position of having to determine whether an employee signed off work due to ill health is too sick to take holiday.
The question also arises as to whether employees on long-term sick leave can carry over their statutory holiday entitlement for more than one year. For example, is an employee who is signed off sick in 2011 entitled to carry over that year's leave and leave for 2012 into 2013? This will be an important consideration for employers with staff on long-term sick leave, as it could generate an obligation to buy out all of the accrued leave on termination.
As the employer won the case, there is no scope for a further appeal to the Royal Court on the law. However, it is possible that a differently constituted tribunal will adopt the 'use it or lose it' approach. As things stand at present, employers should make it clear to employees on long-term sick leave that they must take their annual leave entitlement if they are well enough to do so.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.