A landmark ruling by the Court of Appeal will allow employees who are on long-term sick leave to carry over unused holiday from one calendar year into the next, reports HR Magazine.
The case of NHS Leeds v Larner involved a part-time nurse employed by NHS Leeds.
Janet Larner went on sick leave for the whole of the 2009/10 financial year and was dismissed by NHS Leeds at the beginning of the following 2010/11 year.
Following her dismissal, Mrs Larner asked why she had not been paid her annual leave entitlement in lieu. She was told by NHS Leeds that according to the European Working Time Directive and the subsequent UK Act of Parliament, the Working Time Regulation 1998, they were entitled not to pay her leave which was not taken nor requested to be taken nor carried over.
Mrs Larner's case was upheld at Employment Tribunal (ET), which ruled that she should be paid her leave entitlement, as she was off sick and therefore unable to take leave. The ET ruled that the law does not require an employee on long-term sick leave to notify their employer of their intention to carry leave over or to be paid in lieu.
Mrs Larner's case was upheld by an Employment Appeal Tribunal (EAT); however, a second case was later decided against the employee on similar facts.
In the Larner case, the Court of Appeal was seeking to provide clarity and consistency on the law in this area, which counsel for both sides had argued was inconsistent.
Finding for Mrs Larner, the Court of Appeal ruled that Article 7 of the Working Time Regulations do not require an employee to notify their employer of their intention to carry over annual leave whilst they are off work due to long-term illness.
This landmark decision could have a significant cost impact for employers. Chris Welham is a member of the employment team at law firm Hogan Lovells.
"Allowing long-term sick employees to carry leave forward automatically... could be very costly for employers," he told HR Magazine.
"This opens the way for employees on long-term sickness absence to claim holiday pay for the whole period of their absence when their employment terminates," he added.