Under the Working Time Regulations (WTR), workers are entitled to four weeks “ordinary” leave and 1.6 weeks “additional” leave. In Sood Enterprises Ltd v Healy, the Employment Appeal Tribunal (EAT) held that workers on long-term sick leave can only carry their “ordinary” leave forward and not their “additional” leave, unless there is an agreement for “additional” leave to be carried forward.
Basic facts
After suffering a stroke in July 2010, Mr Healy went on sick leave for the rest of 2010 and part of 2011. He wrote to his employer on 6 April 2011 asking for any holiday pay due to him, but was told that none was payable until his employment was terminated.
He wrote a letter of resignation dated 6 June 2011 to which the company replied saying that, as he had already taken 11 days’ holiday in 2010, he was only entitled to be paid for six days out of his annual allowance of 5.6 weeks including bank and public holidays.
Mr Healy claimed that he was entitled under regulation 13 and 13A WTR to accrued holiday pay amounting to 17 days for 2010 (as he had only taken 11 days out of a possible 28) and 14 days for 2011 which he had accrued by the date he resigned.
The company argued that as he had not asked for holiday pay in 2010, his entitlement did not carry over. Alternatively, that if he was entitled to carry over some holiday, it should only be 20 days (four weeks “ordinary” leave) and not 28 days which would include the 1.6 weeks “additional” leave.
Relevant law
Under regulation 13 of the WTR 1998, workers are entitled to four weeks’ annual leave which must be taken in the leave year in respect of which it is due, and cannot be replaced by a payment in lieu unless their employment is terminated.
Regulation 13A gives workers a right to an “additional” 1.6 weeks annual leave, which again cannot be replaced by a payment in lieu unless their employment is terminated. Subsection 7 states that if there is “a relevant agreement”, the additional leave can be carried forward into the leave year after the one in which it was due.
Tribunal decision
The tribunal ruled that Mr Healy had an entitlement to 28 days’ holiday in each year and was able to carry over the full amount into the next leave year. The law did not require him to ask for holidays or request that his entitlement be carried over in circumstances where he could not take them because he was on long-term sick leave.
On the basis of the decision in HMRC v Stringer, it held that payment in lieu of holidays accrued under regulation 13A were wages, just as they were under regulation 13 and his full claim for unlawful deduction from wages therefore succeeded.
EAT decision
The EAT held that, although regulation 13 states that annual leave “may only be taken in the leave year in respect of which it is due”, European case law has held that workers on long-term sick leave (and who cannot therefore exercise the right) must be allowed to carry forward the four weeks leave granted under EU law. Following the decision in NHS Leeds v Larner, employees were also entitled to automatically carry over holidays while on long-term sick leave without having to request it.
With regard to regulation 13A “additional” leave, parliament had allowed workers to carry over their holiday, but only by agreement. However, as Mr Healy had not signed an agreement to carry forward the “additional” annual leave of 1.6 weeks, he could only carry 20 (not 28) days into the following year. As such, he was only entitled to an extra nine days’ holiday pay for 2010 (based on 20 days’ entitlement, of which he had already taken 11). As for 2011, he was entitled to 28 days pro rata which, in this case, meant he was owed 14 days’ holiday.
The EAT rejected the company’s argument that European case law only directly applied to “emanations of the state”. In other words, public bodies and not private companies/individuals. Instead, it held that the UK regulations must be read in a way to make them compatible with EU law and thus carry forward of four weeks “ordinary” leave applied to both public and private individuals/companies.