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Employers 'must review policies'

Sick workers can claim payments in lieu after EAT ruling

8 August 2011

The union UNITE has called on employers to review their policies after a ruling by the Employment Appeal Tribunal that a worker on sick pay for a year was entitled to payment in lieu for the holidays she was unable to take because of her illness.

The EAT said this was the case even though the clerical worker for NHS Leeds failed to submit a request for the annual leave before the holiday year ended, as required by her contract.

Rachael Maskell, head of health at UNITE, said the judgment prevented employers from putting pressure on sick workers to make a holiday claim and allowed the matter to be dealt with on their return to work.

“Sickness is not a holiday,” Maskell said. “People have holidays built into their contracts because they need the opportunity to rest themselves to be good at their work, especially in the health service, where the work is incredibly demanding.

“Employers are going to have to review their policies in the light of this judgment.”

Maskell added that, given that the EAT’s decision was so clear, she believed NHS Leeds would have a “miniscule chance of success” if it appealed.

Jo Davis, head of employment at BP Collins, said all the existing rules stood for healthy workers, but it no longer mattered if those who were sick for a whole year gave notice of intention to take annual leave.

Davis said the Working Time Regulations no longer reflected ECJ case law and would have to be revised to make it clear that statutory holidays could be carried over into the following year.

Giving judgment in NHS Leeds v Larner (UKEAT/0088/11/CEA), Mr Justice Bean said it might be thought that workers’ entitlement to paid holidays under the Working TimeRegulations 1998 did not arise where they were absent on sick leave for a whole year.

However, he said the Grand Chamber of the ECJ had made it clear in Stringer and others v HRMC (case C-520/06) that sick workers continue to accrue holiday leave, regardless of how long they are away from work (see 21 January 2009).

“Annual leave entitlement accrues during a period of sick leave,” Bean J said. “The issue in this case is whether, if the worker does not submit a request for that annual leave before the pay year ends, she forfeits the entitlement.”

Bean J said Larner worked 20 hours a week.

In January 2009 she began a period of absence due to an unspecified illness, which lasted until April 2010, when the NHS finally dismissed her on the grounds of incapacity due to ill health.

She received full pay for the first six months of her illness, followed by half pay for the next six months and nothing after that. Her employers argued that since Larner had made no request for annual leave during the holiday year, which ended on 31 March 2010, her entitlement was lost both under her contract and the Working Time Regulations.

Bean J referred to the ECJ ruling in Pereda v Madrid Movilidad (case C-277/08), which stated that workers unable to take theirfull holiday entitlement because of sick leave must be entitled to carry over unused days into the following holiday year (see, 15 September 2009).

“Mrs Larner was signed off sick for the whole of the pay year 2009-2010,” he said.

“She is therefore presumed not to have been well enough to exercise what the Luxembourg court has described as her ‘right to enjoy a period of relaxation and leisure,’ so as a matter of law, contrary to what a layman might have thought, she did not have the opportunity at any time during 2009-2010 to take her annual leave.

“Instead, she had the right to have her leave entitlement under regulation 13 carried over to the following year; and she had that right, in my view, without having to make a formal request for the leave to be carried over.

“The right to be paid for that annual leave crystallised on the termination of her employment; as it happens, only a few days after the end of the pay year.”

Bean J said the position might be different in the case of a fit employee who failed to make any request for leave during the whole of a pay year.

“He or she might then lose the right to take annual leave, certainly if the contract so provides, because that worker, unlike Mrs Larner, has in the words of the court in Pereda ‘had the opportunity’ to exercise the right to leave.”

Mr Justice Bean dismissed the appeal.

A spokesman for NHS Leeds said he could not comment on individual cases.

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