Court of Appeal Decision ‘Should Bring Consistency To Tribunal Process’

A landmark judgment that workers are entitled to payment when annual leave has not been taken due to long-term sick leave has provided both clarity on the issue and much food for thought for employers, according to an employment law specialist at Irwin Mitchell.

The Court of Appeal made the ruling in relation to a challenge by NHS Leeds over a tribunal decision that clerical officer Janet Larner, dismissed following a long period of sickness, should be able to gain payment in lieu of leave that was not taken or requested to be carried into the next year.

Appeal judges said that no error was made in terms of interpretation of the law in the initial judgment by the Tribunal, but added there was evidence not all tribunals dealt with the issue in the same manner.  Lord Justice Mummery said he hoped this ruling would bring “clarity” to the matter (and therefore consistency).

Glenn Hayes, a Partner and specialist in employment law at Irwin Mitchell, said that the ruling has been coming and outlined that it was essentially an extension of European case law which had been interpreted by tribunals in the UK.

He added: “Few would argue that the outcome in this significant case is particularly surprising and it should bring an end to any inconsistencies which have been seen on the handling of this issue in recent years.

“In the past there have been several other views on this. In some cases employees had to elect to take their annual paid leave during long-term sickness absence or risk losing it. Alternatively, they were unable to take holiday either by running out of time to do so or being prevented to do so by their employer.

“Quite simply, the latest ruling means if you haven’t taken leave due to illness you will not automatically lose it.”

Hayes went on to outline that the decision may mean that some employers could benefit from reviewing the current rules they have in place around the issue of annual leave.

He explained: “Employers may want to think about several issues when reassessing the guidelines they have in place on annual leave.

“For example, one way to limit the potential impact of this ruling could be to include a provision in contracts which states that a worker can only rollover statutory annual leave – 28 days inclusive of bank holidays rather than a more generous contractual entitlement.

“This may be particularly important for businesses and other employers which offer more generous annual leave allowances to their workers.

“An alternative approach, which may be viewed as something as a last resort dependent on the circumstances of the long-term sickness absence, could be to compel employees to take their annual leave while on sick leave and then pay them accordingly rather than allow a build up of this accrued leave.

“This could prove beneficial, but employers would be wise to recognise the potential risks of such a move.”