Workers can retake annual leave in next leave year

22nd February 2010

In the recent case of Shah v First West Yorkshire Ltd, the Employment Tribunal had to consider whether a worker was entitled to postpone leave and take it in the following leave year, when he was prevented from taking a booked holiday due to a broken ankle. This is the first time an Employment Tribunal has made a finding on holiday and sickness absence since two major European Court of Justice decisions on the issue, Pereda v Madrid Movilidad SA and Stringer v HMRC, were reported last year.

In Shah, a worker was absent from work due to sickness for 3 months from January 2009. During that period, he had previously booked 4 weeks’ holiday. When he returned to work on 18 April 2009, he asked his employer to allow him to take that holiday at another time. His employer refused, as the new annual leave year had commenced on 31 March 2009, and as far as the employer was concerned, holiday could not be carried forward into a subsequent leave year. The worker therefore brought a claim against his employer for breach of the Working Time Regulations 1998 (‘WTR’).

Although Regulation 13(9) of the WTR provides that a worker’s entitlement to leave under the WTR must be exercised in the year of accrual, the Employment Tribunal held that this provision must be interpreted consistently with the European Directive. The European Directive, following Pereda, allows workers to postpone holiday into a subsequent leave year, if necessary, where they are prevented from taking their holiday due to illness. The Employment Tribunal therefore construed Regulation 13(9) in accordance with the European Directive as reading that leave must be exercised in the year of accrual ‘save where a worker has been prevented by illness from taking a period of holiday leave, and returns from sick leave, covering that period of holiday leave, with insufficient time to take that holiday leave within the relevant leave year; in which case, they must be given the opportunity of taking that holiday leave in the following leave year’.

Although this decision is only at Tribunal level (so is not binding on other Tribunals) it is a good indication of how this issue is likely to be dealt with in future. Employers would therefore be well-advised to allow staff to carry forward holiday into the following leave year in cases like Shah, where there is insufficient time for staff to use postponed holiday during the same holiday year.

Whilst in Shah it was clear that the worker was genuinely sick, employers will no doubt be concerned about unscrupulous workers inventing an illness during a period of holiday, in order to increase their annual leave entitlement. To combat this, employers should ensure that their policies are updated to provide that any employee who seeks to reclassify holiday as sick leave must produce a medical certificate confirming that he or she was unfit for work on the day(s) in question.