Temperature rises for employers over holiday pay

The summer holiday season may be a thing of the recent past, but employers should be taking the necessary precautions to avoid getting burnt over holiday pay in the future. Howard Robson, Employment Partner, here explains how the outcome of a recent case means employers are now required to permit holiday entitlement to be carried over for up to 18 months if it has been unused due to sickness.

In the case of Plumb v Duncan Print Group Limited, the Employment Appeal Tribunal (EAT) additionally confirmed that an employee does not have to prove they were unable to take the holiday because of their illness during the leave year in question.

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 tricky area of employment law, but this ruling sets out exactly how long holiday entitlement can be carried forward, which is extremely helpful for employers. It gives 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.

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 is recommended you review the details in your staff handbook and employment contract policies, updating these if necessary. It will not change anything retrospectively, but can help minimise future claims.

A more immediate issue for many employers will be where workers fall sick before pre-arranged annual leave, or during the time they are on holiday. These employees 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.

Again, it’s worth checking what your employment terms state, and making sure they are up to date. For example, you may want your employees to telephone in to confirm their sickness on each day they are claiming, and this can help avoid challenging conversations when they 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. If you feel you need to review your staff handbook or employment contract policies following this decision, or you’d like to discuss your holiday procedures, you can contact Howard or the Employment team on 02380 717717 or visit their section of the website here.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.