No Accrued Holiday Pay For Long-Term Sick

On the 25th April 2005 the Court of Appeal handed down their Judgement in the case of Commissioners of Inland Revenue v Others which effectively overturned the EAT’s controversial decision in Kigass Aero Components v Brown (2002).

The Kigass decision decided that employees who were away from work on long-term sick leave and who were no longer receiving any pay because they had exhausted their sick pay entitlement were nevertheless entitled to claim up to 4 week’s holiday pay per year under the Working Time Regulations. To exercise this leave the long-term sick employee would have to notify his/her employer.

In Ainsworth the Court of Appeal accepted that it was contrary to all ordinary usage for a worker who is off work as a result of illness to say that during some arbitrarily chosen part of that period he is taking “leave”. The Court of Appeal asked the simple question “leave from what?”

This case means that the right to 4 week’s statutory paid holiday under the Working Time Regulations 1998 does not continue to accrue whilst an employee is off on long-term sick leave.

The Court of Appeal also held that non-payment of statutory holiday pay under the WTR is not the same as non-payment of wages. This means that an employee cannot claim back over a number of years on the basis of “a series of deductions or payments”. Therefore any claims under the WTR must relate to one, relevant holiday year.

Practical Tips

	Employers should now take the opportunity to review their current sick pay provisions to ensure that they are consistent with this judicial clarification of the position in relation to holiday pay for the long-term sick.
	However, employers should also beware of potential disability discrimination claims which could arise if holiday pay is refused to “disabled” employees on long-term sick leave.
	This decision will affect the calculation of accrued holiday entitlement when an employee leaves.