Holiday pay owed to employee on sick leave for year, tribunal rules

Employers must pay staff their full holiday entitlements if they are off sick for more than a year and are unable to take their leave, a tribunal has confirmed.

A Sheffield employment tribunal has ruled that James Rawlings, who was off sick for more than a year before leaving his company, was entitled to be paid his full holiday entitlements upon resignation because his absence from work had prevented him from taking his leave.

The ruling in the Rawlings v The Direct Garage Door Company case reaffirmed a judgment by the House of Lords last year in Stringer v HMRC.

The House of Loards held that workers could accrue holiday pay while on sick leave and that it could be carried forward to the next leave year – despite the UK Working Time Regulations stating that it is unlawful for employees to carry over more than eight days.

Putting the judgment in the Stringer case into practice, the Sheffield tribunal found Rawlings, whose sickness absence lasted for the whole of 2005 and until he left the company in 2006, was entitled to be paid for the holiday he had been unable to take during the time off.

John Read, an employment law editor at XpertHR, said employees were now “reaping the rewards” of the Stringer verdict.

He said: “There is a real risk for employers now as the Stringer decision is being put into practice and employees are clearly seeing the benefits of it.”

He warned employers could face backdated claims from staff who have been off sick for a number of years and subsequently leave the company, who believe they have holiday pay owed to them. Under the Employment Rights Act, staff can claim against a series of unlawful deductions from their wages, as long as they make their claim within three months of the last deduction.

He said: “The effect of the Stringer case seems to be that an employee, on termination, can bring a claim for payment in lieu of holiday pay not taken, going back over previous leave years – a series of unauthorised deductions. Although Rawlings claimed under two years’ holiday pay, employees who have been absent on sick leave for many more years should be able to claim their holiday pay for all previous leave years on termination.”

The Rawlings case had previously been stayed pending a decision in the Stringer case.

Judge Trayler said the claimant’s complaint about his holiday leave being deducted from his pay was “well founded” and ordered the company to pay the £1,554 owed in holiday pay.

The case also follows the Shah v First West Yorkshire ruling earlier this year in which an employee was told he should be paid for a four-week holiday he had previously booked but could not take because of his three months of sickness absence.

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