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Holiday Pay Carry Over

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[Thanks to Laurie Anstis of Boyes Turner who is standing in for Daniel Barnett during holiday absence, and to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

Can a worker, who has not taken paid annual leave in the relevant year due to sickness, claim a payment in lieu on termination of employment without having made any prior request to carry the leave forward?

Yes, says the Court of Appeal in NHS Leeds v Larner

Mrs Larner was absent on sick leave for the whole of the leave year 2009/10. During that year she neither took paid annual leave nor requested NHS Leeds to carry it forward to the next year (2010/11). Early on in that year she was dismissed. NHS Leeds refused to pay her for the leave not taken by her in 2009/10. She claimed a payment in lieu of the untaken leave.

Under European law, and the interpretation of Article 7 of the Working Time Directive, holiday pay continues to accrue during periods of absence due to sickness (Stringer v Revenue & Customs (Case C-520-06); Schultz-Hoff v Deutsche Rentenversicherung Bund (Case C - 350/6)) and an employee who is prevented from taking annual leave through sickness must be allowed to take their annual leave that they missed later in the year, or if that is not possible, in a subsequent leave year (Pereda v Madrid Movilidad (Case C-227/8); Asociation Nacional de Grandes Empresas de Distribucion (ANGED) v Federacion de Asociaciones Sindicates (FASGA) (Case C-78/1). The Court of Appeal pointed out that the most recent ECJ decision, Georg Neidel v Stadt Frankfurt am Main (Case C-337/10, 3 May 2012) supported the claimant's case that Article 7 of the Working Time Directive does not impose any requirement of prior leave request.

Article 7 had direct effect against NHS Leeds as an emanation of the State. Therefore, in Mrs Larner's case, as her employment was terminated before she could take her carried forward leave, she was entitled to payment on termination for the paid annual leave she had been prevented from taking, irrespective of any prior request to do so.

The Court also stated that, had it been necessary (in the case of a private employer) to decide the case under the Working Time Regulations, these could be construed, purposively, to give effect to the position under Article 7 of the Directive.