Dismissed Worker and holiday pay - Expert Comments

David Reid
23rd Aug 2011

Dismissed Worker entitled to previous year's holiday pay - EAT judgment has determined that a worker who had been on sick leave for an entire leave year was entitled to a payment. Decision has been built upon the well known European Court of Justice case of Pereda.

Couple retirement

There has been much debate about whether the UK Working Time Regulations (WTRs) are compatible with the Pereda decision, which interprets the European Working Time Directive under which the WTRs were made. On one view, the Pereda decision could be said to be difficult to reconcile with the provision of the WTRs which states that a holiday taken under the WTRs “… may only be taken in the leave year in respect of which it is due.”


However, in this case, the EAT did not have to grapple with this particular question, since it was not deciding whether annual leave could be carried over to a future year due to sickness absence, but was instead deciding whether a dismissed worker was entitled to a payment in lieu of holidays untaken in a previous holiday year. The EAT decided that the right to be paid for annual leave crystallised on termination of employment meaning that payment for the whole period of absence could be received upon termination.


It therefore now appears to be open to a dismissed employee to claim multiple years of holiday pay accrued during a period of sickness absence immediately preceding the dismissal. This could amount to up to five years’ accrued holiday pay in Scotland and up to six years’ accrued holiday pay in England and Wales.


The EAT also concluded that an employee who was on sick leave was presumed not to be well enough to exercise their “right to enjoy a period of relaxation and leisure”, which was held in Pereda to be the purpose of annual leave under the Working Time Directive. In other words, the EAT’s presumption is that if you are not well enough to come to work, you are not well enough to take a holiday. Clearly, there will be differing views on the soundness of that logic.


However, if the EAT is correct, the question then arises as to whether that presumption applies in all cases of sickness absence. If it does, then it may even be questionable whether it is competent for an employer to grant a period of annual leave under the WTRs to an employee who requests a holiday whilst they remain too sick to attend work.

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