The Employment Appeal Tribunal (“EAT”) has now provided further clarification on holiday carry-over entitlements where an employee is absent due to illness. While it is now settled that annual leave continues to accrue during sick leave and that a worker cannot be compelled (although may choose voluntarily) to take holidays during sick leave, the resultant implications of that legal position were more problematic. What length of time does a worker have to take those holidays upon returning to work? Does the carry-over allowance apply only to those physically unable to take holidays during their sick leave? If so, does the onus fall on the worker to demonstrate this? Would employers have to make medical decisions as to whether an illness is sufficiently limiting to qualify? Some of these questions have been addressed (for now at least) by the EAT in Plumb v Duncan Print Group Ltd.
Background – pre-match build-up
Mr. Plumb was the subject of a serious accident in April 2010. Unable to work, he was on sick leave between his injury and the time his employment ceased at Duncan Print Group Ltd in April 2014. Mr. Plumb claimed outstanding holiday pay in lieu for the entire four years of his sick leave. This was rejected by Duncan Print Group Ltd who instead paid only his current year’s entitlement (2013-2014).
Employment Tribunal
In response, Mr. Plumb brought a claim to the Employment Tribunal (“ET”) seeking payment in lieu of all his accrued and unused holiday entitlement between 2010 and 2013. His claim was dismissed by the ET, which held the burden of proof falls on a claimant to demonstrate that he was physically unable, due to illness, to take annual leave.
Considering himself the subject of some poor refereeing, Mr. Plumb appealed to the EAT.
Employment Appeal Tribunal – the re-match
Feeling the ET had committed a flagrant foul, the EAT overturned the decision in part at first instance. The ET erred in imposing an evidential obligation on Mr. Plumb to demonstrate his inability to actually take annual leave during his sick leave period. Under Article 7 of the Working Time Directive (“WTD”), a sick worker need not prove his incapacity in this regard; a sick worker may simply be unwilling to take that annual leave while sick. Furthermore, an employee’s unwillingness in this respect could be implied through his failure to lodge holiday leave requests. In essence, it was a matter of discretion for the claimant. Linked into this was the EAT’s highly purposive approach to leave: that the raison d’etre of annual leave and sick leave are fundamentally different. Sick leave could not be treated as de facto annual leave by an employer.
In terms of how long this right of carry-over from a previous year could last, the EAT held that 18 months was the upper limit. Regulation 13(9) of the Working Time Regulations (“WTR”) was read as providing a sick worker a period of 18 months in which to take unused annual leave (from the end of the leave year in question). Mr. Plumb was awarded payment in lieu stretching into his employer’s 2012-2013 leave year; this falling within the 18 month limit. His claims for the preceding years were dismissed.
Post-match review
There are plus and minus points for both employees and employers through this appeal:
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Clarity
The EAT’s decision here is welcome insofar as it goes some way to clarifying what was a largely ambiguous facet of employment law. However, it should be remembered that the European Court of Justice in KHS AG v Schulte (2012) had previously held that a 15 month carry-over period was acceptable. Without doubt, further clarity on this point would be helpful in the coming months.
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Cap on claims
Nonetheless, the EAT’s decision still helps in establishing how long the “shot clock” may run in terms of allowing a sick worker to seek to claim unpaid annual leave. Ideally, this will mark the end of claimants seeking backdated holiday pay for consecutive years significantly beyond 18 months. From an employer perspective, this is a welcome barrier on such claims and the financial implications they have on their businesses.
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Implied unwillingness
The EAT’s decision that a sick worker’s unwillingness to take annual leave while sick can be implied may be troublesome for employers. There was much to be said for the ET’s decision that a sick worker must prove, at least to some extent, why he could not take annual leave while on sick leave. There are various examples of illness which, although may prevent a return to work, could not be said to render the employee “physically unable” to travel, etc.
That being said, the upholding of the ET’s decision would have required employers to make medical judgement calls as to whether their sick workers were “physically unable” to go on holiday. This would be particularly problematic for non-medically trained employers. An obvious example of this danger would have been employers who unreasonably insist employees off work on mental health grounds are “physically” able to take annual leave. However, there remains the risk of exploitation of the EAT’s position here by employees who could take annual leave with sick, but choose not to in bad faith.
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Type of leave
In accordance with previous decisions on annual leave carry-over, the EAT’s decision relates only to the minimum 4 week holiday period under EU Working Time Directive. It remains unclear whether the EAT’s decision here will be applied to the additional 1.6 weeks leave provided under Regulation 13A of the WTR or any additional contractual leave. Currently, it is thought unused contractual holidays (i.e. holidays given to an employee over and above the statutory minimum) cannot be carried forward at all (unless the contract provides otherwise).
The EAT’s decision here is a very welcome move forward to addressing the confusion which exists in the law. Nevertheless, this remains a highly dynamic topic particularly as the EAT gave permission for parties to appeal to the Court of Appeal.
The rules of this game are far from set in stone. Without a doubt: watch this space – the next game in this arena is sure to be a thriller!
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