August 7, 2013

Limited curb on holiday pay for sick staff

In a just delivered Employment Appeal Tribunal decision, employers are only required to pay holiday pay for the basic right to 4 weeks leave in the Working Time Regulations. There is no requirement to pay the additional 1.6 weeks, which were added when the minimum holiday entitlement increased to 28 days (from 20 days) including bank holidays. Unless the employer has an agreement with the employee for the carryover of annual leave, this case holds that the most an employee can claim on termination of employment for accrued untaken annual leave is the basic 4 weeks.

The reason for this is because the European Directive, which is implemented by the Working Time Regulations in the UK, only provides for a basic entitlement to 4 weeks leave with no carryover of any leave into the next year if the employee cannot take it because of illness. A rare occasion where European legislation has come to our rescue.

Moral of the story for employers? Don’t include the carryover of leave entitlement in contracts. If this is in the contract, the most the employer should have to pay therefore would be the 20 days plus whatever is carried over.

If you have any comments on this blog please contact Gemma Ospedale, Partner for the Employment Department on 020 7583 2222 or [email protected]

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