The Accrual of Annual Leave While Absent Due to Sickness.

Hand QuestionThe Employment Appeal Tribunal provides another piece of the jigsaw in relation to an employees entitlement to annual leave.  Successive governments have avoided providing clarity through the statutes to annual leave accrual and payment and judges have been left to provide what clarity there is through developing case law.

The Working Time Regulations 1998, which implements the European Union’s Working Time Directive, provides that Employees have the right to 5.6 weeks of annual leave which is payable at a rate equivalent to “Normal Pay”.

Although recent case law has adopted an approach to “Normal Pay” which has included overtime and commissions paid over a 12-week period to provide an average “Normal Pay”.  The Employment Appeal Tribunal decision in Plumb v Duncan Print Group Ltd has provided more clarity on the accrual of annual leave while absent from work due to sickness.

In this case Mr Plumb was absent from work due to sickness from April 2010 to February 2014 when his employment was terminated.  Mr Plumb claimed that he was entitled to a payment in lieu of annual leave for the entire period of his sickness absence. The employer had allowed him annual leave for the annual leave year in which he made the request but refused to allow the leave to be carried forward from previous years.

The EAT’s interpretation of the legislation provided that annual leave may be taken within 18 months of the end of the annual leave year in which it accrues if the employee has been unable to take the leave due to sickness.

Although some employers may see the judgement as less than ideal it does provide a finite limit to the amount of annual leave available in long term sickness absence cases.  Although it may have a negative effect on employees by prompting employers to terminate employment sooner rather than later.

The question of why “Normal Pay” still has a value when someone is not entitled to be paid remains, and given that the legal arguments around “Normal Pay” have centred on not discouraging employees to take annual leave what is the logic in maintaining an accrual for annual leave which cannot be taken.

Jim Taylor LLM – 14 December 2015

The opinion given in this article is for general information only and is intended to illustrate and highlight themes which may affect employers and their employees. It should not be taken as specific advice on any situation or the appropriate course of action for any particular company or employer. Should you wish to discuss a similar situation or any other matter please contact Ascent HR Limited. ©Ascent HR Limited.

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