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Use it, defer it or lose it

8th December, 2011

On 3 November 2011, it was held by the Employment Appeal Tribunal (EAT) in Fraser v South West London St George’s Mental Health Trust UKEAT/0456/10, that workers are only entitled to statutory holiday pay under the Working Time Regulations 1998 (the Regulations) if they take statutory holiday or give notice to their employer that they wish to take such holiday.

The case involved a nurse (Mrs Fraser) who was absent on long-term sick leave before eventually being dismissed (after 4 years sickness absence).   Mrs Fraser was paid in lieu of her final leave year’s statutory holiday entitlement but not paid in lieu of her untaken holiday entitlement for the previous two leave years.  She brought a holiday pay claim which was rejected both in the Employment Tribunal and the EAT.

Whilst it was accepted that Mrs Fraser had accrued the right to holiday leave during the years in question, the EAT held that she should have given notice if she intended to exercise that right.  She had not done so and as such, her claim failed.

It was clear from Pereda v Madrid Movilidad SA [2009] IRLR 959 that, as far as the Working Time Directive is concerned, a worker on sick leave has a choice: to take statutory holiday and be paid in respect of it whilst off sick; or to request that the holiday to be deferred. Therefore, if Mrs Fraser had wanted to defer taking her statutory holiday until her return to work, she should have asked the Trust to allow this. Since she did not, under the Regulations it meant that her entitlement to statutory holiday and to corresponding holiday pay, lapsed at the end of each leave year.

This is a positive decision for employers since the onus in on employees to inform employers whether they are to take their holiday entitlement or to defer it.  If the employee fails to do this then it is the employee who will lose their entitlement to holidays and holiday pay.

In light of this case, should your holiday and sickness absence policies need updating, please contact our specialist team of employment solicitors who can offer a free review of such policies.

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