The Court of Appeal has decided in the recent case of NHS Leeds v Larner that an NHS Leeds’ worker who was off sick from work from January 2009 until April 2010 was entitled to be paid a sum in lieu of the annual leave that she had accrued during the 2009/2010 period when her employment was terminated in April 20120.

It had originally been thought that an employee would only be entitled to carry over annual leave, or be paid a sum in lieu of that annual leave if they expressly requested it before the end of that holiday year (if they had been unable to take it due to being off sick).

The UK’s current Working Time Regulations (WTR) provide at regulation 13(9) that leave must be taken in the year in which it is due.

However it has now been decided that the WTR must be construed so that it conforms with the EU Working Time Directive. This means that where an employee is off sick they may be entitled to a payment for the entire period of their sick leave. Even if that covers 2 or more holiday years, if they have been ‘unable’ or ‘unwilling’ to take their leave due to sickness, then an employee will be entitled to be paid for untaken annual leave on their subsequent termination.

Employers should now be aware that an employee now has an automatic right to carry over annual leave to the next holiday year where they are unable to take it due to being ill without the need to request to do so, or where employment is terminated to be paid in lieu for all of this untaken holiday.

Employers should be careful in taking steps to counter this right and seek advice before dismissing employees on long term sick leave earlier than they may previously have done so. Not only does it give rise to a claim for unfair dismissal but also there is a potential for being in breach of the provisions of the Equality Act by discriminating against employees.

If you would like any further information on this issue or if you have another employment query then please contact us on 0118 9209490 or 01491 570900.