Notice must be given before sick worker is entitled to holiday pay

Fraser v Southwest London St George’s Mental Health Trust

In a helpful decision for employers the EAT has ruled that an employee’s entitlement to statutory 4 weeks’ holiday pay whilst on sick leave in historic leave years is dependant on the employee giving notice to the employer. One of the many areas of uncertainty as a result of the Pereda/Stringer cases is whether an employee is entitled to accrue holidays over several leave years. The specific point at issue here was whether employees were entitled to be paid for holiday pay which had accrued during a historic leave year where no request for holidays was made. The answer thankfully is no.

Following an incident at work in 2005, the Claimant went off on long term sick leave and did not return to work before her dismissal in 2008. The Claimant brought a claim for statutory 4 week holiday pay for each of the two years in which she did not receive sick pay.

The EAT dismissed her claim. It was accepted by the parties that the Claimant had accrued statutory holiday during the relevant two years. However, the EAT ruled that an employee is only entitled to holiday pay under Regulation 16 of the Working Time Regulations if the employee has actually taken the leave in respect of which they seek to be paid. They must have given notice of their intention to do so during the years in question in terms of Regulation 15. In this case the Claimant had not done so.

The EAT explained that the giving of notice is more than a formality because without it, the employer cannot know whether or when he is obliged to make the payment. Therefore the ordinary rule of ‘use it or lose it’ applied. Had the Claimant made a request to take the annual leave, the EAT noted that the employer may have been obliged to grant the request. Had she then not had the chance to take the holiday because of her dismissal, she may have been entitled to payment in lieu under Regulation 14. But the onus is on the employee to request the leave.

Whilst technically this case should provide some comfort to employers by saying that they are not obliged to pay employees holiday pay accrued over several leave years where no notice has been given, this case is unfortunately inconsistent with the next case we refer to below and the position may change in the future. Employers faced with this particular point should take advice on a case by case basis to reflect the most up to date thinking until the Government amends the Working Time Regulations, which they are proposing to do sometime in 2012.