Sickness and Holiday Pay Update

Sickness whilst on annual leave used to be considered by employers as an unfortunate circumstance that was borne by the employee. A recent Court of Appeal decision highlights the changes made to this area of law over recent years.
From 2009, some high profile cases started to make the shift to a more employee friendly procedure. In the case of Pereda v Madrid Movilidad SA, the European Courts held that where a worker's annual leave coincides with sick leave, the worker had the option to designate an alternative period in which to take their holiday entitlement. In that case the worker went off sick before the planned holiday, but the principle was also held to apply to workers who fall ill during a period of such leave in the case of Asociación Nacional de Grandes Empresas de Distribución (ANGED) v Federación de Asociaciones Sindicales (FASGA).
In the UK, the Court of Appeal recently handed down its judgment in Larner v NHS Leeds which extends this principle so that now on termination of employment, an employee is entitled to payment in lieu for the paid annual leave they have been prevented from taking as a result of their sick leave.
In this case the employee was on sick leave for the whole of the leave year 2009/2010 and during that time she did not take or request to carry forward her annual leave. She was dismissed early in that year and her employer refused to pay her for the leave she had accrued but not taken in the leave year 2009/2010. The Employment Tribunal found this was an unlawful deduction of wages and the Court of Appeal agreed.
It was decided that:
• The Claimant was entitled to paid annual leave in the leave year 2009/2010.
• She was prevented from taking her paid annual leave because she was sick.
• She was entitled to carry her untaken paid annual leave forward to the next leave year in
2010/2011 without making a prior request to do so.
• As her employment was terminated in that year, before she could take the carried forward
leave, she was entitled to payment on termination for the paid annual leave she had been
prevented from taking (paragraphs 95-98 of the judgment).
This decision will be welcome news to employees, but provides employers with additional considerations when dealing with employees on long term sick leave. If you require any further information regarding sick leave or annual leave entitlements, please contact Mark Serby at or call 0114 266 6660.

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