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More holiday pay headaches? When must holiday leave be carried over?

12 December 2014 #Health & Safety

In another case relating to holiday leave, The Sash Window Workshop Ltd and another v King UKEAT/0057/14, comments by the EAT suggest that workers will be entitled to carry holiday over to the next leave year where they are unable to take their holiday for reasons beyond their control, as an exception to the usual rule that holiday entitlement expires at the end of a leave year. This is already the case if the reason for not taking the leave is the worker's sickness (following NHS Leeds v Larner [2012] IRLR 825), but now the scope of the exception seems to be wider.

This decision appears to extend the scope of the purposive interpretation of the Working Time Regulations, first developed in Larner. It seems to leave open the potential for an employee who has been unable or
unwilling to take annual leave in previous leave years because of reasons beyond his control to have a right to a payment on termination of his employment, in lieu of that untaken leave entitlement. In Larner,
this was only stated to apply to cases where the employee was unable to take their annual leave in previous leave years due to sickness.

However, the EAT's comments also suggest that employees who were at work during the periods when they would otherwise have taken their leave entitlement may have little to gain by arguing the point. Even if employees were prevented from taking annual leave, if they were paid in full for the periods in question, then receiving holiday pay for that same period would be double recovery. The purpose of the WTR 1998 and the Directive is to provide annual leave as a health and welfare benefit, and "any more general right to a payment in lieu would create an incentive not to take holiday". It would appear, therefore, that if there is any expansion to the Larner principle, it is in relation to employees who are neither at work, nor sick, but who are
nevertheless unable or unwilling to take their holiday entitlement due to reasons beyond their control.

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This information is for guidance purposes only and should not be regarded as a substitute for taking professional and legal advice. Please refer to the full General Notices on our website.

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