Long term sickness and annual leave – you don’t ask you don’t get!

Under Regulation 15 of the Working Time Regulations (WTR) a worker has the right to take paid annual leave by giving notice to their employer specifying the dates on which they want to take that leave.

In July of 2011 we issued an insight following the case of NHS Leeds –v- Larner (Larner), where the Employment Appeals Tribunal (EAT) held that employees on long term sickness absence do not have to comply with the notification requirements of Regulation 15 of the WTR, as it is assumed they are not well enough to take a holiday.  In the recent case of Fraser –v- Southwest London St George Mental Health Trust (Fraser) the EAT has had a change of heart.

Facts

Mrs Fraser (F) was absent on long term sickness absence from November 2005.  Her entitlement to sick pay expired in August 2006, but she did return to full pay in November 2007 when she was declared fit to work.  She did not return to work as there was no suitable work available for her.  F’s pay stopped again in March 2008 and she was subsequently dismissed on the grounds of incapacity in October 2008.  During her absence, F never requested to take annual leave.  On the termination of her employment the Trust only paid her annual leave for the 2008 leave year. 

Decision

The EAT considered, following the case of Pereda that an employee may choose to take annual leave during sickness absence, or ask for it to be deferred to a later date.   Importantly, the EAT held that there is no obligation on the employer to inform the employee of their right to request annual leave; the onus lies squarely on the employee.    The Employee needs to inform the employer of their wish to take annual leave or defer the leave until the following leave year.    They are only entitled to defer annual leave if they cannot take the leave in that year.   The rationale in this case therefore suggests that if employees do not take the leave, or do not request to defer the leave, they will lose it.

The EAT’s other key finding was that the right to paid annual leave is only triggered when the employee exercises their right to request annual leave in accordance with Regulation 15.  Therefore, as F had never requested to take annual leave during her absence, and there was no evidence that her ill health prevented her from taking annual leave (which may have entitled her to defer her entitlement), the right to take paid annual leave expired at the end of the leave year.  F was entitled to pay in lieu of accrued but untaken annual leave from the 2008 leave year only. 

Comment

The EAT’s finding in Fraser comes as welcome news for employers as it significantly reduces expenditure on the termination of employment where an employee’s long term sickness absence has continued over two or more leave years and the employee has not taken their annual leave entitlement.  The EAT’s finding in Fraser is however clearly at odds with the decision in Larner and will doubtless be subject to further litigation.

The key finding in Fraser, that a worker on sick leave must request holidays in each separate leave year or they may lose the right, was reinforced in the recent Employment Tribunal (ET) decision of Adams and another v Harwich International Port Ltd (Adams).

Adams was also notable for its finding that a worker on long term sick leave, who had requested holidays in the appropriate form, could carry over all 28 days (for full-time workers) of their statutory holiday entitlement under the UK Working Time Regulations and not just the 20 days which is enshrined in the European Working Time Directive. The Judge in this case came to this conclusion after re-writing parts of the UK’s Working Time Regulations so that they were consistent with European Working Time Directive. The case of Adams is a good illustration of the uncertainty caused when holiday rights interact with the issue of sickness absence and this uncertainty in the Tribunals is likely to continue until the Working Time Regulations are amended by Parliament.