WORKERS ON SICK LEAVE NOT ENTITLED
TO HOLIDAY PAY
Under Regulation 13 of the Working Time Regulations 1998 (“WTR”) a worker is entitled to four weeks’ paid annual leave in each leave year (“Working Time Holiday”). This entitlement includes Bank and Public Holidays. There has been a lot of case law about how Working Time Holiday entitlement should work in practice.
However, in 2002 the EAT reached the following conclusions:
- workers on long term sick leave, who have exhausted entitlement to statutory and contractual sick pay, can take Working Time Holiday paid at the salary they received prior to their absence, even though they are on sick leave (Kigass Aero Components v Brown  ICR 697, reported in Employment Alert No. 42);
- a worker can bring a Tribunal claim for non-payment of holiday pay as an unlawful deduction from wages (under the Employment Rights Act 1996) instead of bringing a claim under the WTR. In practical terms, this meant that workers could claim back payment for all previous years of unpaid holiday (provided that the last failure to pay was within three months of the Tribunal complaint). The WTR does not allow for such back payments – a worker can only bring a claim in respect of a single holiday year (List Design Group Limited v Douglas  ICR 686).
What has the Court of Appeal decided?
The Court of Appeal (in the case of Commissioners for the Inland Revenue v Ainsworth ) has overturned both of the above EAT decisions.
Workers on long term sickness absence who have exhausted their sick pay entitlement (both statutory and contractual) cannot take Working Time Holiday while on sick leave. In addition, if employment ends, they will not be entitled to be paid in lieu of it.
A worker who brings a claim for non-payment of holiday entitlement must do so under the WTR within 3 months of the date when the payment should have been made. Workers may not bring claims relating to previous years of holiday entitlement.
What does this mean for employers?
This decision is good news for employers.
In light of it, employers may wish to consider making it clear that, if workers have exhausted their right to sick pay, they will not be entitled to take paid holiday while they are off work sick. If an employee’s employment ends, they will not be entitled to be paid in lieu of holiday in respect of a period during which they were not entitled to take it. This may necessitate a change to contracts of engagement and employment and/or Employee Handbooks.