One of the difficult questions for UK employers is the right of employees to carry over holiday where they have been absent from work on long term sickness absence.

Recent cases have clarified that where a person is on long term sickness absence they are entitled to accrue holiday and to carry over holiday into the next holiday year whether or not a request to take holiday has been made.  Where employment terminates the worker is entitled to be paid in lieu for annual leave which has accrued but which the worker was unable to take due to sickness (even where that annual leave has accrued over more than one leave year)

The issue for UK employers is that the Working Time Regulations (WTR) which implement the EU Working time Directive do not allow for carry-over of holiday from one leave year to the next.  Therefore neither the amount of the holiday entitlement which can be carried over, nor the period of time over which the entitlement can continue to accrue, is clear .

A UK employee is entitled to 5.6 weeks annual leave under the WTR.  This is made up of the right under the Directive to a minimum of four weeks’ annual leave (20 days) each year (regulation 13(1) WTR) and an additional 1.6 weeks’ annual leave (8 days) (regulation 13A WTR).  A recent case has confirmed that the Directive does not require carry-over of the additional 1.6 weeks leave under regulation 13A where the employee has accrued holiday due to sickness absence over two holiday years.  The regulation is a domestic provision which sets conditions on the payment of leave in excess of the four weeks minimum under the Directive and therefore does not offend against EU law.  However, if there is an agreement between the parties, for example in the contract of employment, the additional 1.6 weeks may be included in the holiday carried forward.

In May 2011, the UK government announced proposals to amend the WTR 1998 to clarify that sick workers must be entitled to carry over untaken holiday entitlement in some circumstances. Those proposals related only to the four weeks minimum leave required by the Directive and not to the additional 1.6 weeks annual leave provided for by the WTR 1998 and therefore this  is now reflected in the case law.  The government has not yet published its response to the consultation and therefore some of the other issues still remain outstanding.

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