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How Do Holiday and Sick Leave Interact? Tribunal Gives Guidance

The interaction between sick leave and annual holiday leave poses a tricky problem for employers. However, in giving valuable guidance on the issue, the Employment Appeal Tribunal (EAT) has improved the position of employees who have to take prolonged periods off work for medical reasons.

A print worker was on sick leave for more than three years after suffering an accident at work. He did not take holiday leave during those years and, after his employment was terminated, sought payment in lieu of those entitlements. However, his claim was dismissed by an Employment Tribunal on the basis that he could not show that he was unable, by reason of his medical condition, to take annual leave.

In allowing his appeal, the EAT identified a mismatch between the Working Time Regulations 1998 (WTR) and the European Directive on which they are based. The Directive requires that an employee on sick leave is not required to take annual leave but may choose to do so. Having decided not to take annual leave during his period off sick, the printer was entitled to take it at a later date. He was not required to demonstrate that he had been medically incapable of taking holiday leave.

The EAT acknowledged that the Directive did not confer an unlimited right on sick workers to carry over periods of annual leave to subsequent years. However, in interpreting the WTR in conformity with the Directive, it found that employees on sick leave are entitled to take holiday leave within 18 months of the end of the relevant year in which the entitlement to that leave accrued.