Sick Pay vs Holiday Pay

14 January 2014

As Maxine Orr of Worthington law explores in this article the working time regulations and their practical outworking can often cause considerable difficulties for employers.

The Working Time Regulations and their practical outworking continues to cause considerable difficulties for employers.  Case law has confirmed that if an employee is unable to take his/her annual leave due to sickness then the employee has the right to take that annual leave at a different date.  Under the Working Time Regulations an employee has the right to take a minimum of 5.6 weeks’ annual leave, however the European Directive permits a minimum of 4 weeks’ annual leave. The recent decision of Sood Enterprises Ltd v Mr Colin Healy considers the extent of what annual leave can be carried over from one year to the next when the employee was unable to take his annual leave due to sickness absence.

Mr Healy was unable to take 17 days of holiday in his leave year in 2010 and 14 days of holiday in his leave year 2011 because he was on long term sick absence from the workplace.  Mr Healy resigned in June 2011.  Mr Healy did not give any notice in his resignation letter. 

The employer responded to the letter stating that no payment was made by the employer to the employee for annual leave in the year 2010 or the time the Claimant had worked from 1 January to 6 June 2011.  The Employment Tribunal stated that the Claimant was entitled to be paid for holiday pay approved but untaken in 2010 and 2011. 

The Employment Appeal Tribunal considered the legal authorities on the taking of annual leave and Regulation 13a and 26a which states that leave could be taken only in the leave year of which it was due and that additional leave in addition to the four weeks provided under the directive may not be carried forward into a leave year other than that which immediately follows the leave year in respect of which the leave is due.  The Appeal Tribunal held that any holiday pay in addition to the four weeks provided by the Directive namely the 1.6 days additional leave provided under the Working Time Regulations in Northern Ireland could not be carried over and was therefore not payable.  The Court found that the Claimant was entitled to 20 days annual leave under Regulation 13 and not 28 days in the leave year 2010 and reduced the figure accordingly.

It is important that employers amend contracts of employment in relation to the taking of annual leave and the accrual of annual leave given the complexity of the law in this particular area.

Maxine Orr is a Partner specialising in employment law in Worthingtons Solicitors.

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