Some clarity on employer liability for holiday not taken due to sickness

09 Dec 2011

In recent years, workers' rights in respect of holiday entitlement during periods of long term sickness have come before the courts time and time again.  Firstly, there was the case of Stringer which found that, where an employee had not had an opportunity to exercise their right to statutory holiday because of sickness, they are entitled to carry this unused holiday over to the next holiday year.  This was followed by the case of Pereda which found that where a worker had been injured shortly before he was due to take annual leave, the worker would be entitled to take a different period of annual leave instead.

This left employers in somewhat of a quandary: if an employee is sick, then they are entitled to take their holiday, but do not have to do so.  Employers were concerned that, following a long period of absence and subsequent termination of employment, they would be faced with a large claim for all of the holiday that the employee had accrued, but failed to take.

This situation has now been clarified by the Employment Appeals Tribunal in the case of Fraser v Southwest London St George's Mental Health Trust in which it was decided that, in order to be entitled to claim holiday from a period of sickness, the employee must have requested to use their holiday or have asked for it to be deferred to a following year.  This means that, if an employee on sick leave has neither asked to use their statutory holiday nor requested that it be deferred to a following year, then they cannot claim a windfall for their previous years' holiday at the end of their employment.

Ultimately, if an employee has not applied to use their holiday, or requested to defer it, they will lose it.

One of the questions asked most frequently by our clients is whether they have to pay an employee on long term sickness absence for their accrued holiday.  The simple answer is, if the employee has asked for it, "yes".  That said, this case has at least given some reassurance to employers in situations where an employee has not asked to take their holiday.

The issue of holiday and sickness absence also raises a more important issue for employers:  make sure that employees with long term sickness absence are managed correctly; otherwise you can end up with a much more serious claim than simply for untaken holiday pay.