Holiday pay sums are hot spot for employers

Posted 18/08/2015

With the summer holiday season at its peak, employers have a hot-spot to watch out for back home, with the news that they must permit holiday entitlement to be carried over for up to 18 months if it has been unused due to sickness.

It follows the decision by an Employment Appeal Tribunal (EAT) in Plumb v Duncan Print Group Limited , which has confirmed also that an employee doesn’t have to prove they were unable to take the holiday because of their medical condition during the relevant leave year.

Previous rulings had already established that workers on long term sick leave could choose whether to take their annual leave during sickness absence. If they did not, and they were still off work at the end of the leave year, they could carry it over under EU law.

“Holiday pay has become a minefield, but this ruling sets out how long holiday entitlement can be carried forward in black and white, which is helpful for employers,” said employment law expert Ross Strowger.  “It gives a bit of reassurance where an employee is off for a number of years, they are unlikely to be able to claim holiday pay for the whole period.”

He adds:  “The decision will only apply to the statutory holiday that’s required by EU law, which is currently four weeks. Any rights regarding extra holiday entitlement will be decided by individual employment terms, so it’s worth checking what your terms say and updating if necessary.  It won’t change anything retrospectively, but can help minimise future claims.” 

A more immediate issue for many employers at this time of year will be where workers fall sick before pre-arranged annual leave, or during the time they are on holiday, as they are entitled to take corresponding paid leave for the number of days they were sick at a later date, as long as they have followed the company’s required notification procedures.  However, unless their employment terms stipulate otherwise, the paid holiday leave will convert to sick leave at the relevant sick pay rate, as they are considered unfit to do the job during that period.

Ross adds:  “Again, it’s worth checking what your employment terms state, and making sure they are up to date.  For example, you may want any employee to telephone in to confirm their sickness on each day they are claiming, and this can help avoid challenging conversations when workers return, if they claim to have been ill whilst they were away.”

Both parties to the Plumb v Duncan Print Group case have been given permission to appeal.