Clearer skies ahead for holidays and sick pay law?

Two recent tribunal decisions could pave the way for a clearer view on holidays and sick pay, says a leading employment lawyer.

Tim Jones, head of employment law at Higgs & Sons, says that the cases of Khan v Martin McColl and Souter v Royal College of Nursing are both helping to clarify the matter for employers across the region.

“Since the House of Lords gave its decision in the case of Stringer, employment lawyers have been arguing over the consequences of that judgment in day to day employment terms,” says Tim.

“In the Stringer case, the House of Lords made clear that an employee on long term sickness absence who had exhausted their contractual and statutory sick pay, did accrue statutory holiday and should be allowed to take it.

“However, what was unclear from the House of Lords was whether the unused holiday entitlement could be carried over and used in subsequent years. The European Court of Justice in its judgment had made clear that its view was that workers accrued four weeks paid holiday whilst on sick leave and should be allowed to take this when they return to work even if their return to work was in the following leave year.”

The case of Khan v Martin McColl highlights that employers may be able to avoid paying accrued holiday pay for a previous year if they act promptly enough.

Tim explains: “Mr Khan started his long term sick leave in May 2008 and did not return to work before he resigned in August 2009. The company made payment of the accrued holiday for 2009 but did not make a payment in lieu for the holiday that had accrued in 2007/2008.

“Mr Khan brought a claim but failed. The Tribunal held that by making the payment of the accrued holiday pay for 2009, this broke the series of deductions. They went further and said that in their view the decision in Stringer provided that employees could only carry over holiday when they had been refused the right to take it. As Mr Khan had not asked to take holiday in 2008 he had therefore not been denied the right and accordingly there was no right to carry over.”

Since the decision in Khan there has also been a decision of the Edinburgh Employment Tribunal in Souter v Royal College of Nursing Scotland. In this case, Mrs Souter held an administrative job with Royal College of Nursing until she retired on the 21 April 2010. She had been on long term sick leave from 7 November 2001 and had been in receipt of permanent health insurance from 7 November 2002. Upon retirement the Royal College of Nursing paid Mrs Souter her accrued holiday for the leave year 1 January 2010 to 21 April 2010. In May 2010, Mrs Souter brought an unlawful deduction action against the Royal College of Nursing seeking compensation for statutory holiday pay in respect of the whole period of her sickness absence. The Edinburgh Tribunal rejected her claim saying that the claim was out of time, that as she had neither sought to take holiday when she was off sick, nor had she been prevented from taking holiday there was no right for untaken leave to carry over, and furthermore that her entitlement to holiday pay would have been at her permanent health insurance rate, not her working salary rate and therefore she had suffered no financial loss.

Tim believes that these two cases now give employers some degree of clarity and hope in what has otherwise been an area of some confusion. “Although it should be recognised that both the cases are Tribunal decisions only and therefore not binding on other tribunals or higher courts, they do give some important guidance to employers and their lawyers.”

For help with your employment law matters, contact Tim Jones directly on 0845 111 5050.