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Dealing with holiday pay can be something of a nightmare for employers especially where an employee has been on long-term sick leave. In Plumb v Duncan Print Group Limited P took four years' sick leave.  Upon dismissal, he sought payment for 60 days' accrued holiday for 2010, 2011 and 2012.  The employment tribunal dismissed the claim because he was unable to show that his medical condition was the reason he did not take his leave.

On appeal the Employment Appeal Tribunal overturned the finding.

  • An employee need not show he was unable to take holiday leave by reason of sickness - it is enough that he may be unable or unwilling to take it
  • Holiday leave cannot be carried forward indefinitely and, following European case law,  the carry forward may be limited to 18 months from the end of the leave year

Accordingly, the EAT held that P was entitled to payment in lieu of annual leave for 2012 but not for 2010 and 2011.

Permission to appeal to the Court of Appeal was granted.

Recently holiday pay has been something of a hot potato; this is what employers need to know:

  1. The Working Time Regulations (WTR) was introduced by the UK government to give effect to the Working Time Directive (WTD). The WTD requires a minimum of 4 weeks paid holiday for all workers.  In addition, workers in the UK are entitled to an additional 1.6 weeks paid leave over and above the minimum entitlement set out under the WTD.
  2. There have been various challenges to how holiday pay is calculated over the years: 
    • BA v Williams held that holiday pay should include all of the elements of remuneration which are “intrinsic” to the performance of the job. 
    • Lock v British Gas held that holiday pay should include commission as well as basic pay. 
    • Bear Scotland v Fulton held that the rates of holiday pay should include compulsory overtime, on call supplements and semi-voluntary overtime.
  3. The above only applies to the 4 weeks holiday leave granted as a minimum under the WTD not the additional 1.6 weeks allowed under the WTR.  That means that employers may be required to calculate different periods of holiday leave at different rates.

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