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Restrictions on carrying forward untaken leave

Updated: Feb 17

Many employers have restrictions on how much annual leave an employee can carry forward but in the event of a dispute about this, it is wise to consider what the law says. Our article will give you some guidelines on a recent case.

Many employees assume that if they do not take their whole entitlement of annual leave before the end of the year to which it applies, they will not be able to carry it forward into the next leave year. However, there are instances in which employees will be entitled to carry untaken leave forward, but only within eighteen months of the leave year in which it accrued.

A recent court case, Plumb v Duncan Print Group Ltd, confirmed this. Plumb was off sick from early 2010 until he was dismissed in February 2014. During 2013, he took paid annual leave and also asked his employer if he could take holiday that had built up from the start of his sick leave until 2012. His employer refused to permit this.

After his employment was terminated, Plumb asked his employer for payment in relation to all his accrued annual leave dating back to the point at which he had gone on long-term sick leave. In response, his employers paid him only for the leave relating to the year in which the claim was made (2013/14) and nothing for the sixty days that had been built up in 2010, 2011 and 2012.

Plumb subsequently brought a claim under the Working Time Regulations 1998 for payment in lieu of the leave that he had applied to take but had been refused.

His claim was rejected by the Employment Tribunal, who said that a 2012 case, NHS Leeds v Larner interpreted Regulation 13(9) of the Working Time Regulations to mean that an employee could only carry forward leave untaken if it could be shown that they were either unable or unwilling to take their annual leave, being on sick leave.

Since Plumb worked at the weekend on a different job, and had been able to take a week’s holiday during the period in question, the Employment Tribunal concluded that he was able to take the annual leave and therefore rejected his claim. Plumb took his case to appeal.

The Employment Appeal Tribunal disagreed with the Employment Tribunal and said that there was no requirement on Plumb to prove that he was unable to take his annual leave due to illness.

Under Article 7 of the Working Time Directive, an employee on sick leave could choose to take annual leave in the relevant leave year but was under no obligation to do so. If they did not take the annual leave during a period of sick leave, they were entitled to do so at a later date.

However, the Employment Appeal Tribunal did not give a green light to employees to carry untaken annual leave over from one year to the next indefinitely. The European Working Time Directive and associated European case law say that any annual leave that is accrued from a previous year will no longer apply after 18 months from the end of the year to which it originally related.

The decision of the Employment Appeal Tribunal means that members of staff whose employment is terminated can make claims for accrued but untaken leave with the 18-month limit applied.

What this case means for employers

The decision of the Employment Appeal Tribunal will come as a relief to employers who might have been concerned about back claims for annual leave untaken over the entire period of the employee’s tenure. Employers should check on their employees’ contracts of employment to ensure that they are compliant with the new ruling, or make amendments accordingly.

However, it should be noted that since both parties have been given leave to take the case to the Court of Appeal, the situation may yet change.

Nevertheless, employees who make back claims for annual leave that has accrued outside the 18-month time frame can be refused.

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