Workers on sick leave can still accrue holiday pay

19| 06 | 2009

Workers on sick leave can

still accrue holiday pay

In the long running litigation of Stringer v HMRC, the House of Lords unanimously decided that claims to enforce entitlement to holiday pay under the Working Time Regulations 1998 can now be pursued as unauthorised deduction of wages claims under the Employment Rights Act 1996. The important practical effect of this is that a worker can take advantage of the more generous time limits which apply to unlawful deduction of wages claims. They will now be able to bring a claim within 3 months of the last in a series of deductions, as opposed to 3 months from the date of each deduction.

In addition, under the Working Time Regulations, a claim for unpaid holiday extinguished at the end of the relevant holiday year. This is not the case under the Employment Rights Act so claims can be made to cover previous years. Employers may be open to substantial holiday pay claims over several years.

The decision has also confirmed that employees do continue to accrue annual leave whilst on sick leave and that they must be paid for untaken leave on termination regardless of sickness absence. However, a number of issues still remain unclear such as whether an employee has to request holiday during a period of sick leave and whether any untaken holiday can be carried over from one year to the next.

Alison Love, head of Hugh James’s employment observed “the decision is definitely a victory for workers with significant cost implications for employers. It is likely to provoke dismay from business, especially in view of the prevailing state of the UK economy. However, a number of unanswered questions remain and will need to be dealt with by the UK courts and tribunals.”