The legal position following the European Court of Justice and House of Lords decisions in Stringer is as follows:
1. Employees who are absent due to sickness continue to accrue holiday entitlement during their sick leave.
Action point:
Employers can limit the accrual whilst on sick leave to the statutory minimum holiday entitlement (currently 28 days for full time employee including bank holidays) if they ensure that contracts of employment contain an express clause to this effect.
2. Employees are entitled to be paid in lieu of untaken holiday on termination of employment. This includes untaken holiday leave in the final year of employment as well as previous years.
Action point:
Claims for accrued holiday pay must be made within three months of the last non- payment. This means employers should always ensure that on termination holiday pay for the employee’s final year should be paid immediately, even if there is a dispute about previous years.
3. Employers can allow employees to take holidays during periods of sickness. Employers can refuse to allow employees to take holidays during periods of sickness.
Action point:
Make sure that you make a decision about which option you want to adopt.
Note: Under the Working Time Regulations as currently drafted employees cannot carry over holiday or be paid in lieu of untaken holiday, except on termination.
The Government has yet to indicate whether it will amend the Working Time Regulations to accord with the ECJ decision in Stringer.
