EAT caps holiday entitlement

Where employees are on long-term sick, they are often unable to take all of their holiday entitlement before the end of the holiday year. It had previously been considered that, where an employee was unable to take their holiday due to incapacity, they were entitled to carry over their full 5.6 weeks’ holiday entitlement into the next holiday year.

Where employees are on long-term sick, they are often unable to take all of their holiday entitlement before the end of the holiday year. It had previously been considered that, where an employee was unable to take their holiday due to incapacity, they were entitled to carry over their full 5.6 weeks’ holiday entitlement into the next holiday year.

The recent case of Sood Enterprises v Healy has, however, limited this carry-over, so that employees on long-term sick are only permitted to carry forwards 4 weeks of untaken holiday to the next holiday year.

Under the Working Time Regulations 1998, our domestic law, we are entitled to 5.6 weeks of holiday per year. This is, however, more generous and in excess of the provisions of the European Directive from which our legislation is derived, which provides for an entitlement of only 4 weeks. 

In considering what entitlement can be carried over by employees on long-term sick, the EAT has ruled that the additional 1.6 weeks provided by our domestic law cannot be carried over into the next holiday year. Carry-over should be capped at 4 weeks in line with the European Directive, unless there is an agreement between parties stating otherwise.

This ruling will be welcome news for employers in reducing the holiday pay burden. This will be particularly the case in circumstances where an employee on long-term sick is exiting after a number of years’ absence and has a number of years’ entitlement accrued.

Employers may also wish to check Contracts of Employment to ensure that they have not agreed to allow an employee any additional carry-over.