Update in relation to carry-over of annual leave

Carry-over of annual leave

UK workers are currently entitled to 5.6 weeks’ annual leave that must be taken in the current leave year. However, recent cases referred by UK courts to the European Court of Justice have held that in certain circumstances workers should be permitted to carry-over annual leave into the next leave year.

Accrual of holiday during sick leave

The European Court of Justice has held that a worker who has accrued holiday during sick leave but has been unable to take it should be allowed to take the leave when they return to work, even if this is in the following leave year.

18 months’ annual leave may be carried-over

Does this mean that annual leave can be carried-over indefinitely? Probably not, as the European Advocate General has ruled that it would be appropriate to limit the time in which accumulated holiday entitlements can be exercised to 18 months. The practical effect of this limit would be that workers will have up to 2 and a half years’ to use a given leave years’ entitlement.

Application in the Employment Appeal Tribunal

In the recent case of Fraser v Southwest London St George’s Mental Health Trust the EAT has held that words can be read into the Working Time Regulations 1998 to enable workers to carry over their statutory annual leave entitlement to the next leave year where they have been unable or unwilling to take it because of sickness. However, the judge did not think that sick workers should be able to accumulate and carry over their leave entitlement from year to year indefinitely.

Do workers have to be paid in lieu of taking annual leave?

In Fraser, the judge held that a worker on long-term sick leave must request annual leave in accordance with the Working Time Regulations 1998 to be entitled to payment for it. There was no dispute that the claimant, F, had accrued leave but the tribunal found that she had to trigger the entitlement to be paid for it by giving notice that she wished to take leave, which she had not done. The ordinary rule is ‘use it or lose it’ and the judge was satisfied that a  worker on sick leave may choose to take annual leave during that absence or ask for it to be deferred until a later period, but it is for the worker to ask. If F had requested to take leave following her recovery, the Trust might have been obliged to accede to that request, and if she had not had the chance to take it before her dismissal, she may have been entitled to a payment in lieu, but that was not what happened.

Government proposals

The Government is proposing to amend the Working Time Regulations to permit untaken annual leave to be carried-over where workers have been unable to take leave due to sickness, maternity, adoption, paternity or parental leave.

This article was written by Lara Murray a solicitor in our Employment Department.