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“Use it or lose it”
[ch 3: pages 41-42]In a further legal development affecting holiday pay and sickness absence, the Court of Appeal ruled in 2012 that a “use it or lose it” approach to holiday rules is not allowed for sick workers. This case is also important because the court confirmed that a worker who is dismissed at the end of a period of sickness absence is still entitled to be paid in full for unused holiday built up during the absence, even if they did not ask to take the holiday while off sick:
Mrs Larner was off sick from her role as a clerical officer for NHS Leeds for the whole of the 2009-10 holiday year and into the next holiday year, suffering from chronic fatigue syndrome and depression. She was dismissed without returning to work. NHS Leeds refused to pay for her holiday for the 2009-10 holiday year, arguing that she was not entitled to it because she made no requests to take holiday or to carry it over to a later leave year.
Her claim to be paid reached the Court of Appeal, which found in her favour. Article 7 of the Working Time Directive does not require a worker to request leave before being entitled to be paid for it on termination, so NHS Leeds was not allowed to insist on that. Mrs Larner had the right to take the annual leave she had been prevented from taking while off sick. Since she did not have the opportunity to take it before being dismissed for incapacity, NHS Leeds had to pay her for it.
Although Mrs Larner worked for a public sector employer (over which the European Working Time Directive has a “direct effect”) the court also confirmed that private sector employers are not allowed to insist that a worker on long-term sickness absence must ask to take or carry forward their annual leave, to be entitled to be paid for it when the employment ends. No decision was reached regarding the extra 1.6 weeks of statutory leave available to workers in the UK but not covered by the European Working Time Directive.
NHS Leeds v Larner [2012] EWCA Civ 1034
The right to be paid for unused holiday at the end of the employment (WTR regulation 14) is absolute (Whitley & District Men’s Club v Mackay EAT/151/00 [2001] IRLR 595). Any contract term that tries to remove this right is void.
The cases in this section of the booklet all concern statutory holiday — the holiday to which workers are entitled under the Working Time Directive and the domestic regulations. Where workers are entitled under their employment contract to extra holiday on top of their statutory allocation, the employer is free to make rules (negotiated through collective bargaining where a union is recognised) about how this extra holiday is treated.