Accrual of Holiday Entitlement During Long Term Sick Leave

You are the owner/manager of a small company that has employees working for it.  One of your employees becomes ill and goes on long term sick leave.  One thing leads to another, and it is several years before you terminate the employee’s employment.  How much holiday pay is the employee entitled to upon the termination of their employment?

This was the issue that recently faced Mr Justice Lewis sitting in the Employment Appeal Tribunal in the case of Plumb v Duncan Print Group Ltd.

Mr Plumb was a printer who worked for his employer (‘Duncan Print’) from 23rd November 1987 until 10th February 2014.  However, following an accident at work, he was absent from work due to sickness from 26th April 2010 until his employment ended.  In 2013 – whilst on sick leave – he formally requested to take paid annual leave for the time that he had been absent from work.  Duncan Print refused to pay him for the previous holiday years but allowed him to take paid leave for the holiday year in which he made the request.  Following the ending of his employment, Mr Plumb brought proceedings in respect of the annual leave that he thought he was entitled to for the years 2010, 2011, and 2012.  The case ended up in the Employment Appeal Tribunal.

Accrual of Annual Leave During Long Term Sick Leave

It is trite law (see for example the case of HMRC v Stringer) that an employee on long term sick leave will continue to accrue annual leave during their sick leave.  The rationale behind this rule is that sick leave and annual leave are for two different purposes: one for an employee to recover from sickness, and the other for the employee to enjoy a period of rest and relaxation for health and safety purposes. 

In Mr Plumb’s case, Duncan Print argued that:

1)      Mr Plumb had to show that he was unable to take annual leave during his sick leave, in order to be entitled to carry it over to a subsequent holiday year; and

2)      If Mr Plumb was entitled to carry annual leave to subsequent holiday years, it was not an unfettered right.

The first argument – that Mr Plumb had to show that he was unable to take annual leave during a period of sick leave in order to carry it forward to a subsequent holiday year – was rejected by the EAT.  This decision is undoubtedly right; it cannot be fair to insist that an employee must take their annual leave entitlement whilst they are too ill to work.  Furthermore, one can see some employers treating a request to take annual leave during a period of sickness absence with considerable scepticism (i.e. If they are well enough to go on holiday, surely they are well enough to return to work?).

The second argument – that the right to carry annual leave to subsequent years is subject to limitations – was accepted by the EAT. Technically, regulation 13(9) of the Working Time Regulations 1998, requires that the first 4 weeks of holiday in any holiday year be taken within that year.  Regulation 13A(7) of the same regulations permits the additional 1.6 weeks of annual leave that UK workers are entitled to may be carried over to the leave year immediately following the leave year in which it is due.  However, the Judge in this case was prepared to read Regulation 13(9) in such a way that it gave effect to the provisions of the Working Time Directive – i.e. annual leave can be taken within 18 months of the end of the leave year in which it accrued (and not after this time), if the worker was prevented from taking it by sickness.

Comment: leaving aside whether it is morally right that annual leave should accrue during periods of long term sickness absence (and there are differing views), it has to be correct for there to be limitations upon the right to carry forward annual leave that accrues during long term sickness from work.  In the absence of such limitations, an employer may find an employee is on long term sick leave for many years and then – when the employment terminates – find that they owe the employee a lot of money for annual leave that has accrued over years in which they have derived no benefit from them.

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